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Treatment of Premium on Acquistion of Associates/JV

This topic has 1 reply, 2 voices, and was last updated 11 years ago by MikeLittle.

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May 5, 2014 at 9:09 am #167477
Christy
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Hi Mike,
Thank you for your P2 lectures they have been extremely useful.
Regarding the premium on acquisition of associates/JV, understood that unlike the case of acquisitions of subsidiaries there is no goodwill to be recorded in SOFP, and that the investment on associate/JV should follow the formula of “cost at acquisition + share of post acq of associate/JV – any subsequent impairment on premium”.
The treatment of the premium itself puzzles me though. Should it be recorded as an income item in SOCI? Please kindly advise.
Christy
May 5, 2014 at 9:03 pm #167550
MikeLittle
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No! Think basic F3 double entry!
Dr investment in associate, credit cash (or however the cost of acquisition has been settled)
That deals with the premium!
On the SOFP follow the rules (cost + share of post-acq – impairments)
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