Fair Value m

- Calculated Goodwill considered as full Goodwill

NCI at acq

Proportion of Net Asset

- NCI share of Net Asset of Sub at acq
- Calculated Goodwill considered as Partial Goodwill

CONSIDERATION TRANSFERRED:
- Cash Consideration:
P acq 80% of S with 80,000 Cash consideration.
Dr Investment in Sub 80,000
Cr Cash 80,000

- Share Transfer
P acq 90% of 100,000 shares in S. And transferred 2 shares for every 3 shares acquired. Fair value of P share price is 2.8$
Number of shares transferred 60,000
Dr Investment in S 168,000
Cr Share Cap 60,000
Cr Share Premium 108,000
- Deferred Consideration
P acq 90% of 100,000 shares in S and promised to pay 1.5$ for each share after 3 years.
Number shares purchased 90,000
Expected cash outflow 135,000

Dr Investment in Sub 101,427

Cr Deferred Consideration 101,427
Subsequently:
Dr Finance Cost/Retained earnings 10,143
Cr Deferre Consideration 10,143

NET ASSET OF SUBSIDIARY - FAIR VALUE

At acq/Pre acq At Reporting Post Acq

Share Cap 10,000 10,000 -
Share P 12,000 12,000 -
Rev Surplus 8,000 10,000 2,000
Re Earnings 23,000 40,000 17,000
Fair Value AJE 15,000 15,000 -
FV Value AJE Depreciation - (3,000) (3,000)
Fair of Brand name and Cus List 20,000 20,000 -
Amortisation of FV aje - (2,000) (2,000)
Contingent L (13,000) (13,000) -

75,000 89,000 14,000

20%
NCI Calculation ( 20%) 80%

NCI At Acq ( Prop Method) 15,000

NCI Share of Post acq Reserve 2,800

NCI at Reporting Date 17,800

NCI At Acq ( FV Method) 18,200

NCI Share of Post acq Reserve 2,800
NCI share of Impairment of Goodwill (X)
NCI at Reporting Date 21,000

INTRA GROUP TRANSACTIONS

1. Intra G Rec and Payable ( Receivable = Payable) 2. Intra G Rec and Payable ( Receivable
Eliminate Rec and Payable during consolidation.
Dr Payable 2.1 Cash in Transit:
Cr Receivable Int G Receivable
Int G Payable
Difference is due to "Sub paid 500$ tp Pa

Adjust Cash in Transit

Dr Cash
Cr Receivable
Eliminate Int G Rec and Payable balance
Dr Payable
Cr Receivable

Working 0: GS
P acq 80% S , therefore S is Sub , 1 April 2023
P acq 30% of A , therefore A is Associate Equity method should be applied

Working 1: Net Asset of Sub

At acq/Pre acq At Reporting

Share Cap 10,000 10,000
Sahre P 12,000 12,000
Rev Surplus 8,000 8,000
Re Earnings 23,000 40,000
Fair V Aje Inventory 2,000 2,000
Brand 5,000 5,000
Dep of FV aje - (750)
Contingent Li (5,000) (5,000)
Elimination of gain on disposal - (4,500)
55,000 71,250

Working 3: Goodwill
Consideration (W2) 66,129
Fair of NCI at acq 10,000 NCI at acq (w2)

Less Net asset at acq ( W2) (55,000)

Goodwill 21,129 Full Goodwill

Imapirment (6,339)

Closing Goodwill 14,790

Impairment of Goodwill (Fair Value me)

Dr NCI 1,268
Dr Re Earnings 5,071
Cr Goodwill 6,339

Impairment of Goodwill ( Proportion of Net Asset M)

Dr Re Earnings -
Cr Goodwill -
 Consideration Transferred (80 85,000
Fair of NCI (20%) 26,000

Net Asset at acq 71,000

Case 1
Fair Value - Full
Goodwill
Goodwill:

Consi Transferred 85,000

NCI at acq 26,000

Less: Net Assqt At acq (Workin (71,000)

Goodwill at acq 40,000

Impairment (8,000)

Goodwill at Reporting Date 32,000

Dr NCI 1,600
Dr Group RE 6,400
Cr Goodwill 8,000

alue of P share price is 2.8$

 2,800 Add to NCI
11,200 Split Between RE and Rev Surplus
Rev Surplus 1600
Retained Earnings 9600
G Rec and Payable ( Receivable not equal to Payable)

h in Transit: 2.2 Goods in Transit

3,000 Int G Receivable
2,500 Int G Payable
ce is due to "Sub paid 500$ tp Parent, however Paranet didn't received yet. Difference is due to " Parent sold 1
Inventory to Sub, but Sub didn't rec
ash in Transit
500 Adjust Goods in transit
500 Dr Inventory
e Int G Rec and Payable balances Cr Payable
2,500 Eliminate Int G Rec and Payable ba
2,500 Dr Payable
Cr Receivable

Working 2: Cons Transferred

I. Cash Transfer 40,000
II. Share transfer 9,600
III. Deferred Consider 16,529

Post Acq
-
-
-
17,000
-
-
(750)
-
(4,500)
11,750

Working 4: RE
 Fair V Method
Parent RE 52,463
Share Sub post acq RE (w2) 9,400
Group share of Impairment of Goodwill ( W3 (5,071)
Unwinding of deferred cons (w2) (992)
Group share of UP (5,600)
Adding extra cal dep over sold asset 525

Re Earnings at Rep Date 50,725

Working 5: NCI Fair V Method

Fair of NCI at acq (w3) 10,000
NCI share of Postq acq Reserve (w2) 2,350
NCI share of Impairment of Goodwill ( W3) (1,268) (Only if Fair Value method applied
NCI share of UP (1,400)

NCI at Rep Date 9,682

 85,000
(56,800)

28,200

Case 2
Partial Goodwill
( Proportion Method)

90,000
14,200

(73,000)

31,200

(7,950)

23,250

Dr Group RE 7,950
Cr Goodwill 7,950
ods in Transit
5,400
3,900
nce is due to " Parent sold 1500$ a,ount of
ry to Sub, but Sub didn't received it yet

Goods in transit
1,500
1,500
te Int G Rec and Payable balances
5,400
5,400

I. Cash Transfer
Dr Investment In Sub 40,000
Cr Cash 40,000

II. Share transfer ( 2 for 5, Fair Value of shares is 3$)

Number of shares t 3,200
Dr Investment In Sub 9,600
Cr Share Cap 3,200
Cr Share P 6,400

III. Deferred Consideration

Dr Investment In Sub 16,529
Cr Deferred Cons 16,529 Liability

Dr Expense/RE 991.74
Cr Deferred Cons 992
 Intra G Inventory Sales:
Sales 50,000 35,000
COGS (40,000) (28,000)

Profit 10,000

Un Profit 7,000 7,000

If Parent sold: If Sub sold:

Dr RE of Par 7,000 Dr RE 5,600
Cr Inventory 7,000 Dr NCI 1,400
Cr Inventory 7,000

Fair Value method applied)

Intra G Non C Asset Sales/Transfer:
S sold to P
Without With
Transfer Transfer
Difference
Car A of Asse 20,000 24,500 4,500
Dep expense (2,333) (2,858) (525)

Car Amount 17,667 21,642 3,975

Goodwill: Fair Value - Full Goodwill

Consi Transferred 45,000

NCI at acq 12,000

Less: Net Assqt At acq (82,000)

Goodwill at acq (25,000)

 P S
PPE 50,000 12,000
Rec 24,000 13,450
Inventory 20,000 9,600
Cash 4,500 3,000

Payable 23,000 14,300

Loan 13,000 8,200
Difference
Elimante from RE of selling com
Add to RE of receiving com

Elimate from Con PPE

Dr RE of Sub 4,500
Cr RE of Parent 525
Cr PPE 3,975
Consolidation
62,000
30,450
30,600
8,500

31,300
21,200
Intra Group Inventory Sales:
Revenue 30,000 9,000
COGS (24,000) (7,200)

Profit 6,000 1,800

Unrealised Profit (30%) 1,800

If Parent Sold: If Subsidiary Sold:

Dr Retained earnings 1,800 Dr NCI (20%) 360
Cr Inventory 1,800 Dr Group RE 1,440
Cr Inventory 1,800

Intra Group Non-C Asset Sales:

On 1 Jan 2022 Parent Sold Non-C Asset to Sub for 50,000$.

At this date Carr Amount of Non-C Asset = 40,000
Use Life = 10 Years

Without Tr With Tra Difference

1 Jan 2022' 40,000 50,000 10,000
Depreciation (4,000) (5,000) (1,000)

31 Dec 2022' 36,000 45,000 9,000

On 1 Jan 2022 Sub Sold Non-C Asset to Parent for 60,000$.

At this date Carr Amount of Non-C Asset = 42,000
Use Life = 6Years

Without Tr With Tra Difference

1 Jan 2022' 42,000 60,000 18,000
Depreciation (7,000) (10,000) (3,000)

31 Dec 2022' 35,000 50,000 15,000

MID YEAR ACQ

P acq S on 1 July. Closjg RE ( 31 Dec) = 66,000$

Opening RE = 42,500$
Profit During Year 23,500
Monthly P 1,958

RE at acq= 54,250
Dr RE of Parent 10,000 Cr NCI (20%) 200
Cr Re of Sub 1,000
Cr Group RE (80%) 800
Cr Non -C Asset 9,000

Dr Group RE (80%) 14,400

Dr RE of Sub 18,000 Dr NCI (20%) 3,600
Cr Re of Group 3,000

Cr Non -C Asset 15,000

P acq 85% of S on 1 April 2023
Fair of NC Asset is 20000 AZN greater than CA, use life is 5 years.
P S
Revenue 350,000 210,000
COGS (174,000) (104,400)

Gross P 176,000 105,600

Admin Expense (45,000) (27,000)

Gen Expense (50,000) (30,000)
Investment Income 15,000 9,000
Interest Expense (10,000) (6,000)

PBT 86,000 51,600

Tax Expense (20,000) (12,000)

Net Profit 66,000 39,600

OCI:
Rev S 9,000 6,300

Total Cons P 75,000 45,900

P acq 80% of Son 1 May

P S S 8/12
Revenue 350,000 210,000 140,000
COGS (174,000) (104,400) (69,600)

Gross P 176,000 105,600 70,400

Admin Expense (45,000) (27,000) (18,000)

Gen Expense (50,000) (30,000) (20,000)
Investment Income 15,000 9,000 6,000
Interest Expense (10,000) (6,000) (4,000)

PBT 86,000 51,600 34,400

Tax Expense (20,000) (12,000) (8,000)

Net Profit 66,000 39,600 26,400

Other Com Income:

Rev Surplus 12,000 4,500 -

Total Com Income 78,000 44,100 26,400

 Consolidated
Revenue 457,500 Working 1: Int G Sales
COGS (W4) (207,267) Sales
COGS
Gross P 250,233
Profit
Admin Expense (75,250) Unrelised P
Gen Expense (72,500)
Investment Income 17,075
Interest Expense (w6) (15,214) Working 4: COGS
Parent
PBT 104,344 Sub
In Sales (w1)
Tax Expense (29,000) UP (W1)
FV Dep ( W2)
Net Profit 75,344 Dep of In G Asset ( W7)

OCI:
Rev S 13,725 Working : NCI
Sub unadjusted P
Total Cons P 89,069 UP (W1)
FV Dep (w2)
Profit att to: Unwinding (w3)
Group ( Balancing f) 73,767 Impairment of Goodwill
NCI 1,577 Elimination of In Expense (w6)
Elimination of Gain on Disposal
T Com I att to:
Group ( Balancing f) 86,783 Adjusted P
NCI 2,286
NCI
NCI share of OCI

Consolidated
Revenue 450,000 Working 9:NCI
COGS (206,800)
Sub Post acq P
Gross P 243,200 Adjustments:
Un Profit (w1)
Admin Expense (70,667) Dep of FV Aje (w2)
Gen Expense (70,000) Imapirment
Investment Income 9,267 Elimination of Dep (w3)
Interest Expense (12,667) Elimination of Gain on disposal

PBT 99,133 Adjusted Profit

Tax Expense (28,000) NCI

NCI share of Post acq Rev
Net Profit 71,133
NCI share of Total Com In
Other Com Income:
Rev Surplus 12,000
Working 1: UP
Total Com Income 83,133 Sales
COGS
Profit
Profit Att to:
Group ( Balance) 68,026 Unrealised P
NCI (W9) 3,107
Dr Group RE
Total Com Income att to: Cr Inventory
Group ( Balance) 80,026
NCI (W9) 3,107
 Working 2: Fair Value Adjustment Working 3: Provision
50,000 PV of Provision
(41,667) Fair Value aje 20,000 Unwinding
Dep Expense (3,000)
8,333
2,500 Working 5: Deferred Consi
PV of deferred C
Unwinding
Working 6: Interest
174,000 Parent In 10,000
78,300 Sub 4,500 Working 7: Non-c Asset
(50,000) Un of P 360 S sold Non C Asset to P on 1 May 2023
2,500 Un of Deferred C 1,029 Without T
3,000 In In Expense (675) CA 22,000
(533) Dep (2,933)
207,267 15,214
Closing CA 19,067

29,700
(2,500)
(3,000)
(360)
(10,000) (Only if FV method used)
675
(4,000)

10,515

1,577
709
 Working 2: Fair Value Dep
FV Adjustment 10,000
26,400
Dep of FV aje 2,000
(3,200)
(2,000)
(6,200) Working 3: UP over Non C Asset
533
(X) Without T With Tr Difference
1 May 2021' 30,000 38,000 8,000
15,533 Dep (2,000) (2,533) (533)

3,107 31 Dec 2021' 28,000 35,467 7,467

-

3,107 Working 4: Intra G Loan

Sub take 20,000 AZN loan from parent at acq date with 10% interest.
Intra G Interest = 1,333

40,000
(32,000)
8,000

3,200 Add to COGS

3,200
3,200
 6,001
360

ferred Consi
17,147
1,029

sset to P on 1 May 2023

With T Diff
26,000 4,000 Sub PL
(3,467) (533) Parent PL

22,533 3,467
with 10% interest.
.

Working 1: Group St
P acq 80% of S. Thefore S is sub
P acq 26% of A , A is associate, Equity method shoud be applied

Working 2: Net Asset of Sub

At Acqusition At Reporting Date

Share Capital 20,000 20,000

Share P 30,000 30,000
Retained Er 45,000 127,000
Rev Surplus 50,000 54,000
Fair Value Adjustment 20,000 20,000
Dep of Fair Value Ad - - 2,000
Brand 28,000 28,000
Amortization - - 1,867
Contingent Liability - 12,000 - 12,000

Total 181,000 263,133

Working 3: Consideration Transferred 236,139

I. Cash Transfer II. Share Transfer

Dr Investment in Sub 120,000 Dr Investment in Sub

Cr Cash 120,000 Cr Share Cap
Cr Share Premium

Working 4: Goodwil
Fair Value Method
Consideration Transferred (w3) 236,139
NCI at acq 45,000 Fair Value

Less: Fair value of net asset of sub at acq (W2) - 181,000

Goodwil at acq 100,139 Full Goodwil

- 22,031

Goodwil at rep date 78,108

Working 5: NCI
Fair Value Method
NCI at Acq 45,000
NCI share of post acq Reserve (W2) 16,427
Impairment of goodwill ( Only in fair value method)- 4,406

NCI at reporting date 57,021

 Post Acq Dr Goodwil 12000
Cr Liability 12000
-
-
82,000
4,000
-
- 2,000
-
- 1,867
-

82,133

II. Share Transfer 16000 III. Deferred Consideration

Dr Investment in Sub 36,800 Dr Investment in Sub

Cr Share Cap 16,000 Cr Deferred Consideration
Cr Share Premium 20,800

Dr Interest expensde
Cr Deferred Consideration

Proportion Method
236,139 236,139
36,200 Proportion of Net Asset - 144,800

- 181,000
91,339

91,339 Proportion Goodwil

- 20,095 If NCI use FV method
Dr NCI
71,244 Dr RE
Cr Goodwill
 If Proportional m
Proportion Method
36,200 Dr RE
16,427 Cr Goodwill
-

52,627
 P S Consolidated
Investment 400,000 28,000 191,861

Deferred C -

96,000

79,339
79,339 Liability - Parent

7,934 RE
7,934 87,273

45,000 Retained Earnings:

- 36,200 Parent RE 450000
Sub Post share 112000
Intra g div paid 5600
8,800 -5600

e FV method
4,406
17,624
22,031
20,095
20,095
post acq reserve 79900
UP -2650

77250
. Profit during the year 76,000 Acquired 30% of A
Div Rec from A 12,500 Associate

Cost
Initial Investment
Dr Investment in Associate 40,000
Cr Cash 40,000

Div Received
Dr Cash 12,500
Cr Div Income/Investment Income 12,500 PL

P acq 80% of S

Sales 50,000
COGS (40,000)

Profit 10,000
Unrealised P 7,500

During the year A sold 23000 AZN amount of inventory to P. Mark Up is 20% and 40% of these inventories remain in wa

Sales 23,000
COGS (19,167)
Gross P 3,833

Un Profit 1,533 Provide adjustment for 460

Parent sold to Associate - Downstream Transaction

Dr COGS/ Retained earnings of Parent 460
Cr Investment in Associate 460

Associate sold to Parent - Upstream Transaction

Dr Share of Profit of Associate/ Re Earnings 460
Cr Inventory 460
Net asset at date of Disp 45,000 Selling P
Goodwill at date of dis 23,000 Fair of Sub at date of disp

68,000 Gain/(Loss) on dis

NCI at date of disp (13,000)

Fair Value of Sub at date of disp 55,000

uired 30% of A

Equity
Initial Investment
Dr Investment in Associate 40,000
Cr Cash 40,000

Share of Profit:
Dr Investment in Associate 22,800 Total In in Associate 62,800
Cr Share of profit of associate 22,800 PL

Div Received:
Dr Cash 12,500 Total In in Associate 50,300
Cr Investment in associate 12,500

NOTE: If Parent company prepares Consolidated Financial statements only

Equity method can be used for recognising Associate.

Investment in Associate 50,300

Dr Impiarment expens 2,400

Cr In in Associ 2,400

these inventories remain in warehouse.

Dr Impairment Loss 11,000

Cr Investment in Associate 11,000
 63,000
(55,000)

8,000
a)
Revenue 829,500
COGS (W 6 ) (348,100)

Gross Profit 481,400

Dis Cost (70,000)

Admin Cost (113,000)
Investment Income (W 5) 14,950
Finance Cost (W4 ) (18,750)
Share of p of assoc 32,399

PBT 327,000
Tax Expense (62,750)

Net Profit 264,250

OCI:
Revaluation G 5,800

Total Com Income 270,050

Profit att to:

Parent 257,125
NCI 7,125

Total CI att to:

Parent 262,475
NCI 7,575

Working 1
P acq 35% of A- A is associate- Equity metho will be applied
P acq 85% of S , S is Sub.

Working 2: FV of Net Asset

Fv Adjusment 8,000
Dep of FV Aje 2,000 Charge to COGS, effect to NCI

Working 3: UP
In group with Sub: In group with Associate:
Sales 39,000 Sales 26,000
COGS (30,000) COGS (20,000)
Profit 9,000 Profit 6,000
Un Profit 2,250 Un Profit 2,100

Dr COGS 2,250 Dr COGS 2,100

Cr Inventory 2,250 Cr Investment i 2,100

Working 4: Interest Expense

Sub in Expense 14,000

Elimination of In Group (5,000)

Sub Full year In expense 9,000

Post acq Share 6,750

Cons In Expense 18,750

Working 5: Investment Income

Parent In Income 46,000
Sub Post acq In Income 1,500
Elimination of In G Interest (5,000)
Elimination of Div form S (15,300)
Elimination of Div form A (12,250)

Cons Invesment Income 14,950

b)
Investment in Associate 145,000 0.25
Share of P of Associate 32,399 0.50
Div Rec from Associate (12,250) 0.50
UP with Associate (W3) (2,100) 0.75

163,050

Working 6: COGS
Parent 320,000
Sub Post acq 60,750
In G Sales (39,000)
UP over S 2,250
UP over A 2,100
Dep of FV Aje 2,000

Consolidated COGS 348,100

Working 7: NCI

Sub Profit 66,000

Elimination of In G In Expense

Full Year Profit 66,000

Post Acq Share 49,500

Less: IN Expense

Net Post acq Profit 49,500 49,500

Dep Expense (2,000)

Adjusted Profit 47,500

NCI share 7,125

NCI share of OCI 450

NCI share of Total CI 7,575

Working 1: Net Asset of Sub

At Acq At Reporting Post Acq

ShareCap 60,000 60,000 -
Ret Earnings 34,000 36,500 2,500
Rev Surplus 4,000 4,000 -
Inventory FV AJE 600 60 (540)

Total 98,600 100,560 1,960

 A B C
I Minutes 30 30 100 160
II Minutes 10 10

I Num of Q/Marks 10 10 40
139,410 II Num of Q/Marks 3
.
Intra Group Inventory Sales
PARENT TO SUBSIDIARY SUBSIDIARY TO PARENT
Double Entry Double Entry 1 Double Entry 2
Dr RE ( Group RE) Dr RE ( Sub RE, Working 2) Dr NCI
Cr Inventory Cr Inventory Dr RE ( Group RE)
Cr Inventory

Inventory ve RE -den full Eger W2( Net asset of Subsisidiary Working -de Adjust
reqemi cix. edeceksense birinci Double entry yazirsan, sonradan o
avtomatik Post Acq-nun icinde NCI-a bolunub gedecek).
Explanation Eger o Workingde gostermeyib ayrica cixiriqsa, o zaman PUP-
ayriliqda iki yere bolub RE ve NCI ile adjust edeceyik.

IMPAIRMENT of Goodwill
Sub-Fair Value NCI Sub-Proportional NCI
Double Entry 1 Double Entry 2 Double Entry 1
Dr RE (Group)
Dr NCI Cr Goodwill
Dr RE (Subsidiary Post acq) Dr RE (Group)
Cr Goodwill Cr Goodwill
Eger W2( Net asset of Subsisidiary Working -de Adjust Proportional Metod
edeceksense birinci Double entry yazirsan, sonradan o olanda impairment NCI-a
avtomatik Post Acq-nun icinde NCI-a bolunub gedecek). tesir etmir. Yalniz RE-den
Eger o Workingde gostermeyib ayrica cixiriqsa, o zaman cixilir qrupda.
Imapirment- ayriliqda iki yere bolub RE ve NCI ile adjust
Explanation edeceyik.
Group Inventory Sales
PARENT TO ASSOCIATE ( Downstream) ASSOCIATE to PARENT ( Upstream)
Double Entry Double Entry
Dr COGS (PL) Dr Share of profit of associate (PL)
Cr Investment in Associate (FP) Cr Inventory (FP)

Unrealised Profit normal qaydada elimizde qalan inventory uzerinden hesablanir,

lakin daha sonra Parent associate-in nece faizini alibsa ona vurulub qrupa aid
hisseni tapilir.

Associate Impairment
Double Entry 2
Dr RE
Cr Investment in Associate

Eger sual dese ki, bizim associate-e olan

investisiyamiz impairment olub. O zaman
tam verdiyi reqemi adjust edirem. Yox
eger dese ki, umumi assocaite X qeder
impaiment olub. O zaman onun bize aid
olan hissesini tapiriq onu yuxardaki
double entry ile adjust edirik.