ACCA P2 Deferred tax – Group accounts

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1. Karina says

   February 21, 2018 at 7:50 am

   I have a question regarding the fair values. I understand that in the Group account we need to adjust the assets to their fair value and also increase the deferred tax liability based on that.
   However I don’t understand, I practical terms, why the individual accounts do not come already adjusted to the fair value. Why this work has to be done during the consolidation? Why the subsidiaries don’t provide their balances with adjusted value already? I am not talking about the exam but in real life.
   thanks

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   • P2-D2 says

     June 6, 2018 at 3:06 pm

     Hi,

     The subsidiary accounts are prepared following IFRS and using historic cost, so PPE will be at the carrying value, inventory at the lower of carrying value and NRV, etc. So the subsidiary’s books do not reflect fair value, i.e. their true worth.

     IFRS 3 states that the assets/liabilities must be recorded at fair value on the business combination, hence the adjustments made in the group accounts.

     Be careful though as we are not adjusting the individual accounts of the subsidiary, just on consolidation of the subsidiary in the group.

     Thanks

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2. brenda1 says

   February 14, 2017 at 1:49 pm

   Thanks for these wonderful lectures.
   I want to know when do i know that an item is supposed to go through the OCI and other items that go through the P&L.
   Thanks

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3. daothuhuong8189 says

   December 5, 2016 at 11:09 am

   A question here:if FV adjustment give rise to DT liability and go to GW. However gw is treated as permanent diff.it means that FV adjustment will become permanent diff accordingly?

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