Comments

  1. avatar says

    i was also questioning whether the subsiduary that you no longer control is consolidated and in that case surely you would no longer call it a subsiduary as a subsiduary company is a company that you control, would you then class this as an associate…this is not made very clear in the lecture and if a question did come up in the exam it would be very helpfull to know.

    Thankyou

    • Avatar of MikeLittle says

      “the subsiduary that you no longer control” is a contradiction in terms! It cannot be a subsidiary if you no longer control it because a subsidiary is defined as “an entity controlled by another entity”

      This will never come up in an F7 examination (maybe it would come up in P2). Would you class it as an associate? It depends what sort of influence your (say) 60% of the shares has in the eyes of a liquidator!

      I think you’re asking the question “Even though we may have 60% of the shares and 60% of the votes, in the circumstance where we are no longer in control, do we treat the investee as an associate?”

      The answer really depends on the circumstances behind your loss of control. If it’s because a liquidator has been appointed to liquidate the subsidiary, then you would no longer consolidate and you would revalue your investment (possibly even to $zero)

  2. avatar says

    Dear sir, you said that a subsidiary is an entity controlled by another entity and the parent need to prepare consolidated FS.

    But considering the examples of >50% of voting rights but not in control due to loan from third party and the third party now has the control over the board, does the subsidiary still consider as the our subsidiary or the third party subsidiary? Do we still need to prepare consolidated FS for the subsidiary? Or will the Lender of the Loan become the new parent of the subsidiary and need to prepare the consolidated FS?

  3. avatar says

    Dear technical support person,

    The audio is not great it repeats what Mike is saying every now n then and starts back from somewhere else i guess skipping or something please kindly explain if its just me having this issue ?

    Mike you are doing a great job as usual, keep it up.

    Many Thanks

    • Avatar of opentuition_team says

      Hi, can you point where exactly the audio is repeating? the timing?
      I can only speculate, the internet connection is breaking up at your end that is why the video picks up and restarts..

      maybe change the resolution to 240 and it will be better?

      • avatar says

        Hello, thanks for replying.

        I watched the whole lecture again and this time there was no issue at all. I think it was giving me these issues last time because while playing the lecture i would normally pause the video and go do some other stuff or take a break and then resume some time later and that is when it gives me this issue of repeating audio. So I guess I shouldn’t pause it for very long then or take the lecture in one go.
        So thank you for your assistance and recommendations.

        Cheers

  4. avatar says

    Many thanks for the valuable resources you’re providing for all members of this forum. I have a question regarding the consolidation of the retained earnings, since you consolidate the part of the retained earnings that was accumulated after the acquisition date, then what will happen to the part was accumulated before the acquisition ?
    the other question why we exclude the pre-acquisition part of the retained earning from the consolidated retained earning while it represent part of net equity we have paid our money for ?

    Thanks.

  5. avatar says

    great lecture just want to make sure i got this right, if the parent company has effective control of the subsidary then consolidated accounts are prepared but if they own more than 50% of shares but does not have effective control, what is the accounting treatment?

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