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ACCA F3 Group Accounts The Consolidated Statement of Financial Position (2c)
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sir you are absolutely great.I was about to discourage on this topic but due to your wonderful lecture i now have the hope that i will able to do something in every question i face .
plz can you help me just a summery or a format on how, when and where to deduct purp when p: is the seller and when s: is the seller .
please this my email : .
Thank you for your comment.
We are not able to give help by email and that is why we have the Ask the Tutor Forums.
Your question is answered in my lectures.
Hi sir, thank you for your efforts for students and this site is so helpful for my acca study.
sir i have one doubt regarding Retained earnings calculation @ 16:55 of this lecture.
i.e., as per question, only S sold goods to P worth 6000 at cost+25%, then only P has to be given effect for the unrealized profit of 1200.
but in the Non controlling interest calculation, S also got effected. why this is happens when we are preparing consolidation statements only with regard to P and its group companies.
For Minority shareholders those sale transaction seems like a normal sales then why we will effect the Non controlling interest, by this Non controlling shareholders will loose profits by 300 ( i.e., 25% of 1200).
My doubt is to why should Non controlling shareholders bear that loss?
Thank you sir,
Reg, Gopal (India)
Firstly, nobody is having a ‘loss’ – the financial statements of P and S separately are not affected. The consolidated statements are not prepared because there is another company in law – in law there is not another company, it is simply showing the position as though there was one big company.
The goods were sold from S to P at a price that included a profit, so it is S who recorded that profit in their accounts. Therefore because some of those goods were not sold externally (and are still in P’s inventory) is it S’s profit (and therefore S’s retained earnings) that needs reducing by the PURP.
Thank you sir
You are welcome 馃檪
Good morning sir, i am passed F3 with 79% yesterday and i am very very thankful to you sir for providing such wonderful learning platform.
I watched full lectures of opentuition F3 with opentuition notes and practiced questions from BPP study text.
Thank you for your post, and many congratulations 馃檪
Thank you sir
You are welcome, and congratulations again 馃檪
sir as exam is computer based how they can ask for complete preparation of consolidation statement
Hi sir,
To calculate the fair value of NCI, can I do it as 0.25/0.75 * 15,000?
thanks 馃檪
If the question did not give a fair value for he NVI, then yes – you would do this.
However in Paper F3 you will almost certainly be given a figure for the fair value in which case you must use the figure given.
Good day,
Sir, if the in-operation literally means it’s starting date how can it have retained earning?
incorporation*
Never mind, got it.
Amazing lecture
I am glad that you got it OK 馃檪
thank you
You are welcome 馃檪
Hi sir,
my problem is in example 1 we take consideration $8000 for share capital of $8000
but according to example 7 we should calculate this way
consideration $8000
Fv of NCI 20%x$10,000=$2000
so total consideration=10,000
share capital =$10,000
Do it either way – the answer is the same.
Hi sir,
in example 1 p acquired 80% ordinary shares of s on its incorporation and in this example 7,p acquires 75% of share capital of s on its incorporation. why we are not calculating fair value in example 1.like we did in example 7.
But we do calculate it the same way – I am not sure what your problem is.
Obviously the non-controlling % is 25% in the second case and 20% in the first case.
HI Sir,
May I know why inventory deduct $1200 instead of $4800, please?
Sorry…it is for example 7
1,200 is the profit that S added on when they sold it to P. Since this profit has not been made by the group (because the goods have not been sold outside) it needs subtracting, so that the inventory is then at its original cost of 4,800 (6,000 – 1,200).
Thanks so much for the explanation, Sir.
You are welcome 馃檪
I have a question concerning example 7. From where did you get the fair value amount of $5000 for the non controlling interest ??
P acquired 75% on the date of incorporation.
Therefore the fair value of the NCI is the remaining 25% of the share capital of 20,000.
Hi John,
Is this lecture working-I have tried different browsers and changing VPN address an it still won’t work. Is anyone else having an issue? Also for the next lecture. All the others are working perfectly.
Thanks,
Laoise
The lecture is working fine. Please ask in the support page if you still have a problem – the link to the support page is above.
Hi Sir
i did a mock exam and was confused with 1 question. The question is on Section 2 which is consolidated statements. It’s with Alice and Bertha.
question says Alice bought 90% of Bertha. Retained earnings at acq was $12000.
Fair value of NCI is $10000
In the statement of financial position retained earnings for Alice is $189000 and Bertha is $72000.
One of the questions is to calculate retained earning.
My calculation were as follow.
P 100% $189000
S 90% x (72000-12000) = $54000
Therefore retained earnings is $189000 + $54000 = $243000
However the corrected answer is $233000.
My conclusion is that the fair value of NCI was adjusted for in retained earnings and i’m confused because I know that we calculate the NCI separate.
Please help.
Thank you
In future please ask this sort of question in the F3 Ask the Tutor Forum and not as a comment on a lecture.
The 10,000 difference has nothing to do with the fair value of the NCI.
It is because there is inventory in Bertha that was sold to them by Alice.
Therefore when we consolidate, Alice’s retained earnings need reducing by the PURP which is 2/3 x 50/150 x 45,000 = $10,000.
Thank you sir
You are welcome 馃檪
Hey sir, i am trying to complete a question on this topic thats very complicated.
it says during the year S co sold goods to P Co for $50000, the profits to S Co beimg 20% of selling price. At the period end 25% of the goods remained unsold in inventories of P Co. At the same date P Co owed S Co 12000 for goods bought and this debt included in trade payables of P Co and receivables of S Co.
i need help with calculating the unrealised profits and hw do they affect the balance sheet.pls.
You must ask this sort of question in the Ask the Tutor Forum – not as a comment on a lecture.
This is dealt with in the lectures!
The unrealised profit is 20% x 25% x $50,000 and is subtracted from the total value of inventory in the consolidated Statement of financial position.
Im sorry sir, thanks mch.
You are welcome 馃檪
hi sir the video only started to show when you were calculating the retained earnings. Were there any workings before that?
Yes – you can hear them but not see them.
Good day Sir, Why did you use 75% in calculating for the retained earnings of S when it has only 25% shares? Thank you.
If I can just explain really briefly,in theory when calculating csfp for retained earnings.
It most likely to use the subsidiary post acquisition profit and mutiply by the percentage acquired added to the parent company.
You can also subtract any amortization and depreciation if applicable to arrive at the group retained profit.
Hope this helps?
P owns 75% of S, and therefore they own 75% of S’s post-acquisition retained earnings.