F7 Study Group Sessions Session 1: Introduction to group accounts; Consolidated Statement of financial Position Thursday, 10th Feb, 2011, 4 PM UK [18:07:03] shadedrose: Hello, everyone [18:07:11] walderj: hello [18:07:20] shadedrose: How are you all? [18:07:32] makhdoom5: fine [18:07:32] Azhar: hey low low:d [18:07:36] S4sure: ok [18:07:37] Azhar: fine [18:07:42] shadedrose: That's nice. [18:07:53] shadedrose: We missed Monday's session due to some problems with OT chat [18:07:54] walderj: :yes: [18:08:11] shadedrose: So let's start with the introduction :) [18:08:37] shadedrose: Who would like to start? [18:09:26] Azhar: well F7 = financial reporting and according to most of the students its tough to pass [18:09:41] shadedrose: I'm shadedrose, and I'm taking F6, F7 and F8 this session [18:09:59] shadedrose: I'm self studying [18:10:02] Azhar: :p [18:10:11] Azhar: i am self studying and preparing for F7 and F9 [18:10:23] shadedrose: {Azhar} that is nice :) [18:11:52] shadedrose: So, I hope everyone knows we are going to start with consolidation [18:12:04] S4sure: thank you [18:12:05] shadedrose: {shadedrose} Hi Martial! Welcome [18:12:12] safiwu: when are we starting [18:12:14] martial28: ok [18:12:25] shadedrose: Right now actually! [18:12:56] shadedrose: We are done with introduction really [18:12:57] shadedrose: :) [18:13:08] shadedrose: let's turn to Consolidation! [18:13:14] martial28: ok [18:13:17] safiwu: right [18:13:32] shadedrose: What is a group? [18:13:52] shadedrose: (these questiosn r asked for you to contribute wht you know) [18:13:53] safiwu: inter related companies [18:14:03] S4sure: the network of a parent company and it's subs [18:15:59] Azhar: group is a relationship between parent and subsidiary [18:16:01] shadedrose: What is a parent? [18:16:09] martial28: but subsidiary if more than 50% is owned [18:16:26] S4sure: the company that has over 50% voting rights [18:16:29] Azhar: the dominant company which hold more than 50% ordinary shares of another company [18:16:41] martial28: a parent is the company who make a takeover [18:16:51] shadedrose: very good. How is investment by a company in sole trader or partnership treated? [18:16:51] walderj: The parent controls / has significant influence over the subsidiary [18:17:25] S4sure: didn't get that [18:17:54] shadedrose: This is the question. When a company acquires another company's more than 50% votign shares [18:17:59] shadedrose: it is treated as a group [18:18:03] martial28: through a simple financial statetement [18:18:10] shadedrose: suppose a company acquired a sole trader business? [18:18:18] safiwu: consolidate statement [18:18:23] walderj: Then the financial statements will be consolidated [18:18:32] shadedrose: in case of sole trader too? [18:18:34] shadedrose: :no: [18:18:35] S4sure: ok [18:18:41] Azhar: the acquisiton [18:18:47] safiwu: intergration of their accounts [18:18:51] shadedrose: When a company acquires a sole trade business, it is considered only investment [18:18:56] shadedrose: and no group relationship arises [18:18:58] walderj: ok [18:19:01] shadedrose: {safiwu} right [18:19:27] shadedrose: Which IAS is relevant to be quoted here? [18:19:47] shadedrose: for consolidated financial statements? [18:20:13] shadedrose: IAS 27 [18:20:23] shadedrose: Consolidated and Separate Financial Statement [18:20:29] shadedrose: you might need to remember that. [18:21:35] Azhar: consolidation is a requirement of IAS 27 which requires a relation of subsidiary and parent between the companies [18:21:43] shadedrose: very well! [18:22:03] shadedrose: and what does IAS 27 say about the circumstances in which a group is required to prepare consolidated f. statements [18:22:24] martial28: i think iFRS 3 [18:22:42] shadedrose: yes business combinations [18:23:29] martial28: i did nt get the next question [18:23:45] shadedrose: IAS 27 requires the preparation of c. financial statements when the parent company has control over the subsidiary [18:23:47] walderj: It must cover the same accounting end date [18:23:47] safiwu: i think when the parent controls more than 50% of the [18:23:51] shadedrose: the question is [18:23:58] shadedrose: when is control established? [18:24:02] shadedrose: under IAS 27 [18:24:07] shadedrose: {safiwu} of the? [18:24:23] safiwu: susidiary [18:24:28] shadedrose: and? [18:24:30] walderj: Significant influence of the running of the sub [18:24:37] Azhar: control is beased on the ownership of more than 50% of voting power [18:24:38] shadedrose: there r other situations too! [18:24:50] shadedrose: {walderj} {walderj} :yes: [18:24:57] wrathofheaven1: {walderj} significant nifluence is for associates [18:25:14] shadedrose: where P has power to govern S's activities n policies by cirtue of an agreement or statute [18:25:33] shadedrose: {wrathofheaven1} over Running of the business (operations) [18:25:38] martial28: if the parent company con govern the financial and operating activities of s (more than 50%)of share acquired ) then there is control [18:25:48] wrathofheaven1: significant influence can be above 20% or when the question states [18:26:08] wrathofheaven1: control is due to 50% voting power or by virtue of contract [18:26:13] martial28: that is associate [18:26:14] shadedrose: even when this is not the case (50% shares r not acquired) [18:26:36] wrathofheaven1: {martial28} yes its associate [18:26:40] shadedrose: it may be required to prepare c statements where it has been agreed [18:26:51] shadedrose: under an agreement or statute [18:27:08] martial28: actually ,by agreement [18:27:26] safiwu: (shadedrose) so u can prepare consolidation even if less than 50% [18:27:37] martial28: that is an alternative defination [18:27:56] shadedrose: so far i haven't encoutnered such questions [18:28:01] shadedrose: but IAS 27 states that [18:28:06] safiwu: ok [18:28:08] wrathofheaven1: {safiwu} yes but examiner doesnt go there [18:28:24] safiwu: they may just do in june [18:28:26] shadedrose: {wrathofheaven1} yes u r right i think [18:28:33] shadedrose: {safiwu} no.. [18:28:47] shadedrose: this is one of the OTHER situations [18:29:33] shadedrose: When can a parent company exclude one or more of its subsidiary from Consolidated F statements? [18:29:40] walderj: I dont think the examiner strays far from the basics it just the amount you are expected to do will take a lot longer than 3 hours! [18:30:11] martial28: if p owns less than 50% of share in p consolidation is required only for the case of associate [18:30:13] shadedrose: {martial28} {walderj} :yes: [18:30:42] walderj: if the subsidairy is winding up? [18:30:50] martial28: that is more than 30% of voting share [18:30:51] shadedrose: :no: [18:31:03] shadedrose: 1- Lack of Effective Control [18:31:28] shadedrose: Would someone like to elaborate this? [18:31:46] shadedrose: When there is lack of control, A Parent is not required to include tht Subsidiary [18:32:01] shadedrose: now... lack of control here doesn't mean less voting shares [18:32:20] shadedrose: but the EFFECTive control [18:32:28] wrathofheaven1: {shadedrose} i think ur going way ahead of F7's level [18:32:35] shadedrose: :no: [18:32:35] S4sure: what is effective control [18:32:44] shadedrose: It is in our syllabus and I have updated book. [18:32:46] wrathofheaven1: {S4sure} effective control is in P2 [18:32:49] wrathofheaven1: not here [18:32:51] Azhar: thats the case in which a subsidiary is operating under long term restrictions [18:32:59] shadedrose: {Azhar} :yes: [18:32:59] martial28: not we are tere [18:33:03] S4sure: ok [18:33:18] shadedrose: {wrathofheaven1} Actually we need to know these details for writing questions [18:33:22] shadedrose: but in preparation [18:33:28] shadedrose: we r not required to deal with them [18:33:29] wrathofheaven1: hmm ok [18:33:36] shadedrose: {S4sure} azhar means tht [18:33:45] safiwu: can example be administration? [18:34:03] shadedrose: even if we own more than 50% voting shares (tht's how it becomes a Subsidiary) [18:34:08] martial28: in fact lack of effective control mean the parent is not in the position of governing the operating actions of s [18:34:11] shadedrose: it lacks the control in reality [18:34:19] shadedrose: maybe the government is controlling it [18:34:26] shadedrose: and interfering in its policies [18:34:39] safiwu: (shadedrose) [18:34:41] safiwu: ? [18:34:42] shadedrose: so the P is still parent but not actually controlling the Subsidiary [18:34:45] martial28: e g when the s is under serious restriction [18:34:59] shadedrose: {safiwu} administration? hmm no [18:35:06] Azhar: it usually happens in case of foreign subsidiary [18:35:23] safiwu: ok [18:35:31] shadedrose: so one is [18:35:35] shadedrose: lack of effective control [18:35:37] shadedrose: and the other? [18:35:41] martial28: yes(AZHAR) [18:35:53] Azhar: subs held for resale [18:36:04] shadedrose: :yes: [18:36:22] martial28: that under IFRS 5 [18:36:40] shadedrose: How many of you have prepared [18:36:42] wrathofheaven1: arnt all subs classified as available for sale? [18:36:46] shadedrose: and practices CSFP [18:36:55] martial28: I [18:37:12] safiwu: i did some reading some time back [18:37:31] shadedrose: F7 is about practicing [18:37:34] shadedrose: so... [18:37:46] shadedrose: because of the nature of the paper [18:37:47] safiwu: my first time this season [18:37:49] Azhar: {wrathofheaven1} it depends on the parents strategic plans [18:37:54] walderj: deffo agree with that - I did the GB and now have to do INT [18:38:05] shadedrose: {walderj} not much difference [18:38:19] wrathofheaven1: {Azhar} what other classification is possible? [18:38:21] walderj: few - treatment of goodwill [18:38:23] shadedrose: So, let's discuss CSFP? [18:38:30] martial28: ok [18:38:34] walderj: k [18:38:41] safiwu: ok [18:38:49] shadedrose: In exam, we'll be required to deal with only one subsidiary [18:38:57] Azhar: {wrathofheaven1} :no: [18:39:05] safiwu: is that what the sylabus sya [18:39:12] shadedrose: We know that control is established with more than 50% control [18:39:24] safiwu: ok [18:39:26] martial28: yes [18:39:31] S4sure: yes, just one sub [18:39:33] shadedrose: so, let's say [18:39:51] shadedrose: XYZ plc , parent, acquired 60% or S [18:40:01] shadedrose: what is the remaining 40% of S called? [18:40:09] S4sure: NCI [18:40:12] Azhar: NCI [18:40:16] shadedrose: :yes: [18:40:18] martial28: non controling interest [18:40:36] walderj: k [18:40:41] shadedrose: Keeping any notes [18:40:46] shadedrose: and explanations aside [18:40:55] Azhar: :o [18:41:00] shadedrose: if you have SFP of Parent and Subsidiary [18:41:06] shadedrose: What will be ur approach [18:41:12] shadedrose: towards preparing CSFP [18:41:35] shadedrose: (the working which are MUST whether or not there r other notes) [18:41:50] wrathofheaven1: GW [18:42:01] wrathofheaven1: Fair value adj [18:42:06] wrathofheaven1: Ret earnings [18:42:08] wrathofheaven1: NCI [18:42:12] shadedrose: :yes: [18:42:13] wrathofheaven1: PUP [18:42:13] martial28: show the resources controlled by XYZplc and the results achieved [18:42:30] Azhar: group structure:o [18:42:31] shadedrose: {martial28} Perfect answer [18:42:38] walderj: And adj for time where approiate [18:42:39] shadedrose: {Azhar} yeah tht's the 1st one [18:42:42] Tammi: what's PUP? [18:42:56] shadedrose: {wrathofheaven1} PUP is not MUST [18:43:01] shadedrose: {Tammi} PURP she means [18:43:06] martial28: provision for unrealised profit [18:43:08] wrathofheaven1: {Tammi} Privision for unrelised profit [18:43:21] wrathofheaven1: {shadedrose} yes but its there :D [18:43:22] Tammi: thanks :) [18:43:31] shadedrose: :yes: [18:43:32] walderj: post and pre acquisition [18:43:37] martial28: it occur during intra group transaction [18:43:42] wrathofheaven1: If you guys know nothing [18:43:45] shadedrose: {walderj} and what is included? [18:43:49] martial28: and mus be elimanated [18:43:57] wrathofheaven1: just add all the way ;) [18:44:04] shadedrose: {wrathofheaven1} it is easy [18:44:16] shadedrose: Okay now the next [18:44:18] shadedrose: subtopic is [18:44:22] S4sure: eliminate inter grp trnsctn [18:44:23] shadedrose: COST OF INVESTMENT [18:44:35] shadedrose: What is deferred payment? [18:44:46] safiwu: the net assets of sub [18:44:47] S4sure: paymnt at a later date [18:44:50] shadedrose: deferred consideration* [18:45:00] walderj: generally inolves tax [18:45:00] shadedrose: :yes: [18:45:12] shadedrose: {walderj} {walderj} what involves tax? [18:45:14] martial28: it cash to be pay later as part of the acquisition cost [18:45:30] shadedrose: yes. The investment in Subsidiary can be in form of [18:45:35] shadedrose: intial cash paid [18:45:40] martial28: no that is involve [18:45:41] shadedrose: and? [18:45:47] S4sure: shares [18:45:56] shadedrose: {S4sure} right shares exchange [18:46:05] shadedrose: and deferred consideration [18:46:11] walderj: sorry misread [18:46:16] martial28: simply discount the future payment to actual date [18:46:28] shadedrose: wht is unwinding the discount? [18:46:56] S4sure: 4gotten [18:46:59] shadedrose: np [18:47:09] shadedrose: let's say $4000 is deferred consideration [18:47:17] shadedrose: and will be paid 3 years later [18:47:33] shadedrose: we account for deferred payment by suitable interest rate given to us [18:47:36] martial28: it is the interst calculated on actual value of the deferred consideration [18:47:49] shadedrose: and as each year passes, we UNWIND the discount [18:48:02] shadedrose: let's say deferred cons at 1st jan 2001 [18:48:14] shadedrose: while preparing CSFP at 31st Dec 2001 [18:48:22] shadedrose: u record the Deferred Cons and also [18:48:30] shadedrose: unwind the discount for 1 year [18:48:40] shadedrose: because 1 year has been passed for tht [18:49:12] safiwu: where does the unwinding appear [18:49:19] shadedrose: in non current liabilities [18:49:26] shadedrose: with the deferred consideration [18:49:32] martial28: yes [18:49:36] safiwu: ok [18:49:41] shadedrose: u ADD Def cons to Non current liabilities and also the discount [18:49:46] Azhar: the amount which is required to pay subs [18:50:08] shadedrose: So Cost of investment done [18:50:15] shadedrose: How do you treat the impairment? [18:50:24] shadedrose: and where does it go i nworkings/ [18:50:38] martial28: what about contigent consideration? [18:50:52] shadedrose: {martial28} contigent and deferred cons r the same :/ [18:50:52] martial28: before impairement [18:50:54] wrathofheaven1: it goes in GW [18:50:55] shadedrose: just different names [18:50:59] wrathofheaven1: and Ret. Earnings [18:51:02] shadedrose: AND 2 more workings [18:51:06] martial28: no [18:51:07] shadedrose: also in NCI [18:51:16] walderj: non current assets [18:51:25] wrathofheaven1: yup [18:51:32] safiwu: impairment appears in nci? [18:51:38] shadedrose: yes share of it! [18:51:44] martial28: whent exchange of shares are involved during the acquisition [18:51:45] safiwu: ok [18:51:48] shadedrose: let's say impariment of Goodwill was $1000 [18:52:06] shadedrose: use whole Imp in GW working [18:52:19] shadedrose: deduct from NCI working (NCI share) [18:52:28] shadedrose: and in W5 (Retained earnings) [18:52:32] shadedrose: {martial28} didn't get u [18:52:40] safiwu: ok [18:52:42] shadedrose: {martial28} we discussed share exhange [18:52:46] shadedrose: is there more to it? [18:53:32] shadedrose: Now [18:53:44] shadedrose: How is Fair Value of Assets adjusted? [18:54:12] safiwu: in the retain earnings [18:54:21] shadedrose: {safiwu} :no: [18:54:22] wrathofheaven1: assets and ret eranings [18:54:29] walderj: Deducted or added to cost of investment [18:54:32] martial28: i mean when eg XYZ plc has to exchange may be 200shares against 5000 shares in S,that is a contigent consideration [18:54:57] shadedrose: {martial28} is it called tht too? i didn't know tht. okay so wht about it? calculation?> [18:54:58] wrathofheaven1: {martial28} noo its not [18:55:11] wrathofheaven1: {martial28} no no [18:55:15] shadedrose: {walderj} NO [18:55:15] wrathofheaven1: its not [18:55:20] wrathofheaven1: its just an arrangment [18:55:27] shadedrose: {wrathofheaven1} yeah exactly [18:55:42] martial28: ok [18:55:51] wrathofheaven1: deffered/ contingent cons is when they agree to pay further in future [18:55:52] shadedrose: Coming to fair values: At acquisition the fair value of S's assets was 200 more. [18:56:01] martial28: we need to check more on [18:56:17] shadedrose: So we adjust this amount in Net Assets of Subsidiary at both acquisition and reporting date [18:56:25] shadedrose: {wrathofheaven1} that's wht i said earlier [18:56:37] safiwu: if it was 200 more we reduce retain earns by 200 [18:56:41] martial28: yes in W2 [18:56:44] shadedrose: No. ADD [18:56:47] safiwu: and reduce assets by 200 [18:57:04] shadedrose: because fair value is 200 more than in SFP [18:57:05] safiwu: sorry!! [18:57:09] shadedrose: it's alright. [18:57:19] shadedrose: and also see if depreciation is applicable over there [18:57:34] safiwu: yep [18:57:36] martial28: ok [18:57:45] shadedrose: alright why do we eliminate intra group transactions? [18:58:10] safiwu: so we dont double charge [18:58:13] martial28: because a person can treat with itself [18:58:21] shadedrose: {martial28} :yes: [18:58:27] walderj: due to profits being under or overstated [18:58:32] shadedrose: {safiwu} there won't be a double charge :D [18:59:10] martial28: that u can no sell something to urself and claim a profit on it [18:59:13] Azhar: to have a fairer FS [18:59:15] shadedrose: okay so if P's accounts show $600 owing to S [18:59:33] shadedrose: how will u eliminate this from accounts? [18:59:52] shadedrose: What r the double entries for tht? [19:00:19] shadedrose: in the above exampke [19:00:20] walderj: dr Parent Creditor Account 600 [19:00:32] shadedrose: {walderj} {walderj} :yes: [19:00:33] walderj: cr sub Debtor account 600 [19:00:38] martial28: elimated it by debitng sale and cr COS of th group by 600 [19:00:40] shadedrose: SImply [19:00:49] shadedrose: Cr total receivables [19:00:51] shadedrose: Dr Payables [19:00:52] S4sure: cr subs debtors [19:01:04] martial28: yes yes [19:01:08] shadedrose: in both cases (minus) [19:01:14] shadedrose: from the totals [19:01:27] martial28: it was in CIS [19:01:30] shadedrose: whtever the case be... whether the buyes was P or S [19:01:50] shadedrose: {shadedrose} CIS has different adjustments [19:02:07] shadedrose: Wh owould like to tell us about [19:02:11] shadedrose: Cash in transit? [19:02:55] S4sure: cash paid out but not yet rcvd at the other end [19:03:12] shadedrose: :yes: [19:03:16] martial28: IT a payement made by one group company which has not yet been receveid by the other group company [19:03:18] safiwu: dr cash cr receivables [19:03:21] shadedrose: how is it treated in CSFP [19:03:29] shadedrose: {safiwu} Yes! [19:03:39] shadedrose: {martial28} u r right [19:03:40] S4sure: yes [19:03:51] shadedrose: similarly for goods in transit [19:04:17] safiwu: inventory [19:04:26] shadedrose: Dr inventory cr payables [19:04:27] martial28: DR cash in transit and CR inventoryor receivable in the recipient account [19:04:36] safiwu: yep [19:04:42] shadedrose: {martial28} {martial28} : / [19:04:58] shadedrose: {martial28} that is not the adjustment for goods i ntransit [19:05:09] martial28: hein [19:05:28] shadedrose: Okay.. we all could go on now but here I would like to ask all of you something [19:05:35] shadedrose: please [19:05:39] safiwu: the receiver: dr inventory cr receivables [19:05:51] martial28: go ahead [19:05:57] martial28: please [19:06:02] safiwu: ok [19:06:02] walderj: k [19:06:05] shadedrose: Which texts r u using? [19:06:12] shadedrose: Please name the publisher [19:06:14] walderj: kaplan [19:06:24] shadedrose: 1 K [19:06:26] shadedrose: :) [19:06:27] safiwu: bpp [19:06:29] shadedrose: and others? [19:06:31] shadedrose: ok [19:06:34] shadedrose: 1 -1 [19:06:35] martial28: KAPLAN [19:06:38] shadedrose: 2-1 [19:07:02] safiwu: am yet to get the updated one [19:07:07] shadedrose: alright :) [19:07:15] shadedrose: because I would liek all of you to [19:07:16] safiwu: so i use OT [19:07:23] shadedrose: {safiwu} no problem [19:07:33] shadedrose: Complete all questions from CSFP [19:07:37] shadedrose: from your texts [19:07:51] shadedrose: and bring any doubts and problems in the next session [19:07:54] shadedrose: okay? [19:07:55] safiwu: as at wehn [19:08:04] shadedrose: the next is on Saturday [19:08:05] safiwu: ok [19:08:06] martial28: OKAY [19:08:11] shadedrose: where we will solve one question [19:08:13] safiwu: time pls [19:08:15] shadedrose: and move to CIS then [19:08:18] shadedrose: 6PM UK [19:08:23] safiwu: ok [19:08:30] walderj: k cheers [19:08:38] shadedrose: please see the schedule in case there r any changes [19:08:41] shadedrose: :) thank you all [19:08:46] shadedrose: so.. let's proceed now? [19:08:50] martial28: it the same tim as today rigth [19:08:55] shadedrose: :no: [19:08:57] safiwu: ok [19:09:04] shadedrose: 4PM only on thursdays [19:09:14] shadedrose: 6PM on Sats and Mondays [19:09:34] shadedrose: UNREALISED PROFIT [19:09:36] martial28: okay [19:09:49] shadedrose: how many of you are comfortable with it? [19:09:52] safiwu: the saturday can we change the time [19:09:58] martial28: me [19:10:07] safiwu: to 3pm [19:10:09] shadedrose: what time do you suggest> [19:10:48] shadedrose: I'll elt you know :) [19:10:52] shadedrose: *thinking* [19:10:56] safiwu: ok [19:11:02] shadedrose: let's proceed to Unrealised profit for now [19:11:36] shadedrose: hmm so wht IS PURP [19:12:35] shadedrose: Any one? [19:12:50] safiwu: stock from sub or parent which has not been sold [19:13:08] walderj: end of year profit for goods still within the group [19:13:15] shadedrose: It is the profit that arises from intra group trading [19:13:22] shadedrose: {safiwu} yes [19:13:25] martial28: it a provision for a profit made when an item of inventory sold internaly is still in the buyer stck at the reporting date [19:13:46] shadedrose: and that profit is dealt in wht way? [19:14:39] shadedrose: Earlier we know... when there is intra group trading [19:14:44] shadedrose: the current accounts should be eliminated [19:14:46] martial28: DRetained earn W2 OR W5 AND [19:15:05] shadedrose: {martial28} Very good. and why W2 OR W5? [19:15:43] safiwu: affect profit [19:15:51] shadedrose: depending on who the seller was [19:16:00] shadedrose: if the seller was parent, dr W5 [19:16:05] martial28: W2 when it s the SUBS WHO SOLD AND W5 WHEN IT ISTHE PARENT WHO SOLD [19:16:08] shadedrose: if it was Subsidiary, W2 [19:16:15] shadedrose: {martial28} correcto! [19:16:16] shadedrose: :) [19:16:24] shadedrose: and wht about the other entry? [19:16:26] shadedrose: wht is Credited? [19:16:33] martial28: thanks [19:16:46] shadedrose: :) [19:16:55] shadedrose: Any questions at this point? [19:17:00] martial28: CR inventory or [19:17:15] martial28: non current asset [19:17:17] shadedrose: Cr inventory.. yes! [19:17:33] shadedrose: well for non current assets [19:17:38] shadedrose: don't we have the other way? [19:17:50] martial28: yes [19:17:58] safiwu: credit retain earnings [19:18:06] shadedrose: {safiwu} {safiwu} :no: [19:18:15] martial28: we need to take care of depreciation [19:18:20] safiwu: dr inventory [19:18:29] shadedrose: {safiwu} :no: [19:18:35] shadedrose: Dr retained earnings, cr inventory [19:18:54] shadedrose: {shadedrose} yes [19:19:00] shadedrose: {martial28} yes [19:19:08] shadedrose: and because we need to take care of depn [19:19:13] shadedrose: we use the other method [19:19:15] martial28: find the carrying value of the NCA sold [19:19:32] shadedrose: CV at reporting date with transfer - CV at reporting date without transfer [19:19:39] shadedrose: and we adjust the resulting figure [19:19:44] martial28: yes [19:20:11] shadedrose: How do we treat Mid Year acquisitions? [19:20:27] safiwu: pro rota [19:20:39] martial28: yes somehow [19:20:53] shadedrose: The post acq balances only [19:21:06] safiwu: yep [19:21:10] martial28: yes [19:21:18] shadedrose: So that brings us here [19:21:25] shadedrose: anything else in CSFP? [19:22:00] safiwu: what can be difficult with depreciation? [19:22:15] shadedrose: because non current assets [19:22:19] shadedrose: involve depreciation [19:22:34] shadedrose: we can't simply adjust tht profit the way we do with inventory [19:22:45] martial28: yes [19:22:56] shadedrose: tht's why simply, see wht would have been the value of tht asset at reporting date without transfer [19:23:00] shadedrose: and wht it actually was [19:23:09] shadedrose: the difference will be the profit to be adjusted [19:23:13] martial28: depreciation reduced the PURP [19:23:16] shadedrose: nothing to do with dep then [19:25:41] shadedrose: Okay, i owuld like to now bring this session to an end [19:25:52] shadedrose: in the next session, we'll begin with a question. [19:25:55] safiwu: thanks [19:26:00] shadedrose: as we r using different books [19:26:10] shadedrose: I'll share the question in pdf or any other format [19:26:15] shadedrose: {safiwu} u r welcome :) [19:26:17] safiwu: where can i find past discussions [19:26:26] shadedrose: there is a thread for that :) [19:26:33] shadedrose: I'll post it in an hour or so. [19:26:40] safiwu: ok [19:26:51] shadedrose: http://opentuition.com/groups/f7-financial-reporting/forum/topic/all-f7-int-study-group-sessions-history-session-june-2011/ [19:26:54] shadedrose: Here :) [19:27:01] Tammi: which question? [19:27:02] shadedrose: Thank you all for participating. [19:27:09] shadedrose: A surprise question. Next Session: Saturday, 12th Feb, 2011 @ 6PM UK