ACCA FR Syllabus D. Preparation Of Financial Statements - Make sure you use FV of Net Assets Acquired - Notes
A subsidiary is brought into group accounts at FAIR value at acquisition
Here's a subsidiary at Book Value
Property, plant and equipment | 47,400 |
Financial asset: equity investments | 7,500 |
Inventory | 20,400 |
Trade Receivables | 14,800 |
Bank | 2,100 |
Equity shares of $1 each | 40,000 |
Retained earnings | 26,600 |
10% loan notes | 8,000 |
Trade Payables | 17,600 |
NET ASSETS at book value | 66,600 |
The FAIR Values of the above net assets were the same as their book value with the exception of PPE which had a FV $3000 in excess of the book value
Here's the subsidiary at FAIR Value
Property, plant and equipment | 47,400 + 3,000 |
Financial asset: equity investments | 7,500 |
Inventory | 20,400 |
Trade Receivables | 14,800 |
Bank | 2,100 |
Equity shares of $1 each | 40,000 |
Retained earnings | 26,600 |
Revaluation Reserve | 3,000 |
10% loan notes | 8,000 |
Trade Payables | 17,600 |
NET ASSETS at fair value | 69,600 |
Once the FV of the NA has been calculated, the total goes into the goodwill calculation as follows:
FV of Consideration | X |
NCI | X |
FV of Net Assets Acquired | (X) |
---|---|
Goodwill | X |
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Syllabus D. Preparation Of Financial Statements
D2efg. Calculating Goodwill
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Full Disposal
Syllabus D. Preparation Of Financial Statements
D2h. The disposal of a parent’s investment