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Hi! My question here is why don’t we time apportion the trade receivables amount of the subsidiary as it was acquired on the 1 April 20X4. Please explain. Thank You!
On 1 april 20×4 Penfold acuired 80% of Superted’s equity shares in a share for share exchange. Extracts from individual F/S of Penfold and Superted as at 30 Sept 20×4 are shown below.
Penfold Superted
$000 $000
Trade receivables 32400 38000During the year Penfold traded with Superted and had a payable of $6 million at 30 Sept 20X4. Superted’s receivable balance differed from this due to a $2 million payment from Penfold not being received until Oct 20X4
What will be reported as receivables on the consolidated SOFP as at 30 Sept 20X4?
This question is from the Kaplan exam kit. Q347
Hi,
We’re looking at an asset at the end of the year over which we have control in the SFP. Even though we may have acquired the subsidiary part way through the year we still have full control of the asset at the year-end and so will consolidate it 100%. We do not pro-rate the figure.
It is only in the SPL that we would look to pro-rate the revenues/costs as they will accrue from the date we gained control.
Thanks
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