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    Case: Ii: Lecturer: Mr. Shakeel Baig

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    Kathleen De Jesus
    This document contains class notes on IFRS consolidation topics including: 1. The treatment of impairment losses on goodwill, which can be charged to either the group or both the group and non-controlling interest (NCI). 2. Fair value adjustments arising from acquisitions, which affect goodwill, group retained earnings, and NCI. Additional depreciation may also result from fair value increases to property, plant, and equipment. 3. The consolidation of income statements, which fully combines the parent and subsidiary income statements, then segregates the profit after tax (PAT) between the group share and NCI share. Upward revaluations of inventory held by the parent are considered

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    Case: Ii: Lecturer: Mr. Shakeel Baig

    Uploaded by

    Kathleen De Jesus
    40 views2 pages
    This document contains class notes on IFRS consolidation topics including: 1. The treatment of impairment losses on goodwill, which can be charged to either the group or both the group and non-controlling interest (NCI). 2. Fair value adjustments arising from acquisitions, which affect goodwill, group retained earnings, and NCI. Additional depreciation may also result from fair value increases to property, plant, and equipment. 3. The consolidation of income statements, which fully combines the parent and subsidiary income statements, then segregates the profit after tax (PAT) between the group share and NCI share. Upward revaluations of inventory held by the parent are considered

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    Fair Value Adjustment

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    This document contains class notes on IFRS consolidation topics including: 1. The treatment of impairment losses on goodwill, which can be charged to either the group or both the group and non-controlling interest (NCI). 2. Fair value adjustments arising from acquisitions, which affect goodwill, group retained earnings, and NCI. Additional depreciation may also result from fair value increases to property, plant, and equipment. 3. The consolidation of income statements, which fully combines the parent and subsidiary income statements, then segregates the profit after tax (PAT) between the group share and NCI share. Upward revaluations of inventory held by the parent are considered

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    40 views2 pages

    Case: Ii: Lecturer: Mr. Shakeel Baig

    Uploaded by

    Kathleen De Jesus
    This document contains class notes on IFRS consolidation topics including: 1. The treatment of impairment losses on goodwill, which can be charged to either the group or both the group and non-controlling interest (NCI). 2. Fair value adjustments arising from acquisitions, which affect goodwill, group retained earnings, and NCI. Additional depreciation may also result from fair value increases to property, plant, and equipment. 3. The consolidation of income statements, which fully combines the parent and subsidiary income statements, then segregates the profit after tax (PAT) between the group share and NCI share. Upward revaluations of inventory held by the parent are considered

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    PWC Diploma IFRS Class Notes

    Group Inventory 3000


    CASE: II
    Group R. E (3000*80%) 2400
    NCI (3000*20%) 600
    Group Inventory 3000
    GRE Debit XXXX
    Treatment of Impairment loss on Goodwill
    NCI DEBIT XXXX
    Goodwill Credit XXXXX

    Full Goodwill is Charge Impairment to Charge in CRE & NCI


    Recorded both Group and NCI Debit: CRE & NCI
    Credit: Goodwill

    Treatment of
    Impairment loss on
    Goodwill

    Only Group Charge Impairment to Charge in CRE


    Goodwill is CRE Debit: CRE
    Recorded Credit: Goodwill

    GRE Debit XXXX


    Goodwill Credit XXXXX
    FAIR VALUE ADJUSTMENT  Subsidiary Company at any Date
    Net Assets= T.A – T.L

    Increase / Decrease in F.V of Net Assets Additional Depreciation

    Pre-Acquisition Effect ONLY Effect will be Post Acquisition

    Goodwill & NCI Retained Earnings & NCI


    Reason: In Consolidation Group Accounts  F.V of net assets of S-Company is taken net Book Value
    Remember: (NO DEPRECIATION)
    1- Land 2- Assets Under F.V Model 3- Intangible Assets with indefinite life 4- Inventories
    5- Development Phase Assets

    Example: - Plant in S-Company


    NBV = 100,000 with life 10 Years Then Depreciation is Equal to 100,000/10 = 10,000/year
    At the time of acquisition the Plant F.V was = 150,000 with life 10 years then Deprecation is 150,000/10= 15,000/year

    F.V Up
    Q: Page 17, 11.4 Example, CN
    and Additional Depreciation up by 5,000

    Goodwill Group Retained Earnings NCI


    Cost Considerations xx Parent Reserves xx N.A of S at Reporting Date xx
    Less: F.V of N.A of S-Company at Acq. +Subsidiary Reserves +Fair Value Adjustment xx
    Share Capital xx Post Reserves xx - Additional Depreciation xx
    +Reserves xx Less: Additional Depreciation -xx Adjusted Net Assets xx
    +F.V Adjustment xx Net Total Reserves of S-Company xx x NCI % x%
    16Net
    | PAssets
    a g eat Acquisition x %holding xx X % Holding of Parent
    L e c t u r exxr : M rNCI
    %
    . at
    S hFair
    a Value
    k e e l B a i gxx
    Goodwill xx Group Retained Earnings xx
    PWC Diploma IFRS Class Notes

    CONSOLIDATION INCOME STATEMENT


    Parent + Subsidiary [ IFRS 10 Full Method]
     100% add up components of I/S of Parent and Subsidiary up to PAT even if the holding is <100%
     The Segregate the PAT in to Parent and NCI Share
     Parent Share will be Balance Figure

    GROUP PAT

    Non-Controlling Interest Group Share of Profit

    PAT (Post Acquisition) xxx Group Profit After Tax xxx


    - URP (Upward) (xxx) - NCI Share (xxx)
    - Additional Dep (xxx) Balancing Figure xxx
    Adjusted PAT xxx
    x NCI % x%
    NCI Share xxx
    Impairment Loss (xxx) Full Method
    NCI Share xxx

    Why Upward only? Because Inventory is with Parent Company & Profits unrealized with S-Company
    Example Class Notes: Pg-19
    Home Assignment, Course Notes: 04-14, 04-16, 04-21, 04-24, 04-29)

    IFRS-CLASS-03
    INTRA GROUP TRADING

    Sales: Parent Sales + Subsidiary Sales – Intra Group Sales XXX


    CGS: Parent CGS+ Subsidiary CGS – Intra Group Sales + URP (XX)
    Gross Profits: Parent G.P – URP (check purpose) XXX

    URP up to Unsold Goods, if all goods sold by the year end, then there’s no URP

    Solve Class notes: Page-21 & Page 23

    URP: Upward Sales Only


    IAS-28 Do not combine Assets & Liabilities of
    Associate with Parent Co & Subsidiary Co.

    17 | P a g e Lecturer: Mr. Shakeel Baig

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