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F3-Consolidation SOFP-V2022

The document outlines the principles of consolidation in financial reporting, focusing on the valuation of non-controlling interests and the calculation of goodwill. It provides formulas for determining consolidated financial position, including adjustments for unrealized profits and intra-group transactions. Additionally, it emphasizes the importance of eliminating investments in subsidiaries and using parent company figures for share capital during consolidation.

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18 views

F3-Consolidation SOFP-V2022

The document outlines the principles of consolidation in financial reporting, focusing on the valuation of non-controlling interests and the calculation of goodwill. It provides formulas for determining consolidated financial position, including adjustments for unrealized profits and intra-group transactions. Additionally, it emphasizes the importance of eliminating investments in subsidiaries and using parent company figures for share capital during consolidation.

Uploaded by

Bunthea
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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Consolidation

Statement of
Financial Position
LENG CHANREANGSEY, BA, CAT, DEPUTY
MANAGER
Concept of Control
Basic consolidation
Non-controlling
interest – valuation
• Non-controlling interest can be
valued at:
– proportionate share of
acquire's identifiable net
assets; or
– fair value.
• Fair value can be based on MV
of shares.
• Valuation of the non-controlling
interest will affect the goodwill
calculation.
Formulas for Consolidation SOFP
Goodwill = Consideration + NCI at Acquisition – Net asset of Subsi. At Acquisition
Net asset of Subsi. At Acquisition = Subsi. Capital + Subsi.Premium + R/E @acqui. + Increase in F.V of N.C.A
Unrealized Profit (URP) = Profit x % of remaining inventory
Investment in Subsidiary must be eliminated during consolidation
Share Capital must be using figure from Parent Company only
Current Asset
Inventory = Parent’s Inventory + Subsi. Inventory – URP
Receivable = Parent’s Receivable + Subsi. Receivable – intro-group AR/AP
Current Liabilities
Account Payable = Parent’s Payable + Subsi. Payable – intro-group AR/AP
*** Intra-group transaction must be eliminated
Formulas for Consolidation SOFP
In the case of Subsidiary sell goods to parent
Group Retained Earning = Parent R/E + Parent’s share of Post-Acqui.R/E
Non-Controlling Interest (NCI) = NCI at acquisition + NCI’s share of Post-Acqui.R/E
Parent’s share of Post-Acqui.R/E = (Subsi. R/E at year end – R/E @acqui. - URP) x %parent
NCI’s share of Post-Acqui.R/E = (Subsi. R/E at year end – R/E @acqui. - URP) x %NCI

In the case of Parent sell goods to Subsidiary


Group Retained Earning = Parent R/E + Parent’s share of Post-Acqui.R/E – URP
Non-Controlling Interest (NCI) = NCI at acquisition + NCI’s share of Post-Acqui.R/E
Parent’s share of Post-Acqui.R/E = (Subsi. R/E at year end – R/E @acqui.) x %parent
NCI’s share of Post-Acqui.R/E = (Subsi. R/E at year end – R/E @acqui.) x %NCI
Working
W1.Goodwill
Consideration
NCI at Acquisition
Net Asset of Subsi. At Acquisition
S. Share Capital
R/E at Acquisition
Goodwill

W2.Unrealized Profit
Sale
Profit
URP (50%)

W3.Group R/E
Parent Retained Earning
Parent’s share of Post-Acqui.R/E
URP
Group R/E

W4.Non-Controling Interest
NCI at acquisition
NCI’s share of Post-Acqui.R/E
Non-Controlling interest
26.3 What amount should appear in the
group’s consolidation SOFP as at
31.Dec.20X2 for Group Retained Earning?
Question3
Question4
Question5
Question6
Question7
Question8

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