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Case: Ii: Lecturer: Mr. Shakeel Baig

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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61 views

Case: Ii: Lecturer: Mr. Shakeel Baig

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

Uploaded by

Kathleen De Jesus
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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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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