Group Accounts: The Consolidated Statement of Financial Position (1a) - ACCA (FA) lectures
YouTube video
28 Comments
L
Lisa·
Very easy to understand, I was able to work out the solution to Q2 before you laid it out. Thank you so much!!
P
Prabhs·
Hello, are these videos also applicable for the FAR exam within the ACA professionals?
Z
Ziggy·
Hi John,
A quick question, why did we subtract the pre-acquisition retained earnings of S to calculate consolidated retained earnings. Didn't P pay extra (8000) to make those earnings theirs?
Thank you.
I
Imran·
Sir, examples you are doing from which book?
J
John MoffatTutor·
Our freely downloadable lecture notes (as it stated at the start of the lecture!!).
M
Muhammed Saleem·
Sir,
Why you did't take investment cost and share capital of S in consolidated SOFP? ex:1
**I read other comments also, but I couldn't understand the reason.
Please clear my doubt sir.....
J
John MoffatTutor·
The consolidated SOFP is showing it as thought it is just one big company. Instead of showing the investment in S we are showing the assets and liabilities of S.
H
Hermela·
Hello sir, I don't understand why you neglect to add the investment on s and why you pick it us P's assnt also why you don't add the S's share capital
J
John MoffatTutor·
We are showing the statement as if it was just one big company owned by the shareholders of P.
S's share capital is replaced by the net assets of S (and you will remember from earlier lectures that the share capital of any company is equal to the net assets of the company).
K
Kartik·
Hello,
Can you please explain the reason for adding retained earnings if Net assets = Share Capital + reserves?
J
John MoffatTutor·
Retained earnings is a reserve
A
Asif·
Great thanks
A
Anna·
Hello John,
thank you so much for videos. I am not strong in English, but I understood i passed FA! Thank you so much for your work.
J
John MoffatTutor·
Thank you for your comment and many congratulations on passing :-)
A
Arahn·
Hi John. this might be a silly question but I do not understand why you leave out the investment of 10,000 in this question? I hope you can let me know.
J
John MoffatTutor·
We are replacing the investment in the subsidiary with the assets of the subsidiary.
S
shakir7385·
Hi Mr. John. Great effort as always.
I have following confusion which i am trying to clarify:
1) In example 1 - While consolidating, we did not added up share capital of subsidiary company (10,000) to the parent company. Parent company's share capital stood at (25,000) before and after the consolidation. Does it mean that the (10,000) share capital of "S" was already included in the share capital of "P"? If this is the reason then i got the logic else please explain otherwise. And if it was already included in 25,000 share capital of P, then why we were showing investment of 10,000 separately in un-consolidated account of P?
2) In example 2 - We have eliminated the previously carrying retained earning of "S" (8,000) while consolidating the retained earnings of both the companies. It may be possible that "S" may have declared the dividends of all 8,000 after it was acquired by "P". Or if not, then may be it can declare in coming next months. My question is, how long this 8,000 will keep on eliminated for how many years? Can there be any event in future which let that 8,000 not to continue further?
N
nelde·
39000+7000=46000, not 45000
N
nelde·
ohhh sorry, I copied the exercise wrong :) thats why it didnt matched with me at the very end
T
Taurus·
1.What adjustments do we make for Share premium? Shall I consider only for the parent company or both?
2. Are equity shares equal to share capital?
A
abdur12345·
hey,
sir i am still unclear about why we are not showing the investment amount and share capital of subsidiary in the consolidated sofp, because the justification you provided that we are bringing the net assets of subsidiary is confusing, because then why are we bringing the retained earnings of subsidiary??
Thanks
J
John MoffatTutor·
You will know from the very earliest FA lectures that net assets are equal to share capital plus reserves.
A
abdur12345·
Thanks sir
i would like to thank you for your teaching, may God bless you
Y
Yedidia·
Sir, you say that we ignore the share capital of the subsidiary company in the Consoliated SoFP; my understanding is that the "share capital" of the subsidiary company is represented by its assets and liabilities in the Consolidated SoFP, is this correct?
J
John MoffatTutor·
What you write is true. But what I say in the lecture is that we do not show the share capital of the subsidiary in the consolidated accounts precisely because we are replacing it with the net assets.
F
Francisco·
Dear John,
About the consolidated accounts, we do a fair value adjustment when the fair value is higher than the carrying value, what about when the fair value is lower than the carrying amount? do we do an adjustment (negative one) as well?
Thanks.
I
Ik·
Thank You so much for the Fantastic teachings. I appreciate it.
I have a quick question. I work in a subsidiary company that is involved in selling contents to the Parent at a Mark-up of 5% and VAT of 5% and the Parents company Pay for this service. First question is, while computing the Net VAT to be remitted to the tax authority, is it proper to deduct the VAT that happened as inter-company sales or just concentrate on the VAT output tax charged to other companies
Second During consolidation, how do we treat the VAT element in the PUP and Profit made from sales.
Is it even right to charge VAT in the first place for inter-company transactions.
Thanks
J
John MoffatTutor·
Please do not ask this sort of question as a comment on a lecture.
The VAT treatment is not examinable in Paper FA - you need to ask in the Paper TX Ask the Tutor Forum.
A quick question, why did we subtract the pre-acquisition retained earnings of S to calculate consolidated retained earnings. Didn't P pay extra (8000) to make those earnings theirs?
Thank you.
Why you did't take investment cost and share capital of S in consolidated SOFP? ex:1
**I read other comments also, but I couldn't understand the reason.
Please clear my doubt sir.....
S's share capital is replaced by the net assets of S (and you will remember from earlier lectures that the share capital of any company is equal to the net assets of the company).
Can you please explain the reason for adding retained earnings if Net assets = Share Capital + reserves?
thank you so much for videos. I am not strong in English, but I understood i passed FA! Thank you so much for your work.
I have following confusion which i am trying to clarify:
1) In example 1 - While consolidating, we did not added up share capital of subsidiary company (10,000) to the parent company. Parent company's share capital stood at (25,000) before and after the consolidation. Does it mean that the (10,000) share capital of "S" was already included in the share capital of "P"? If this is the reason then i got the logic else please explain otherwise. And if it was already included in 25,000 share capital of P, then why we were showing investment of 10,000 separately in un-consolidated account of P?
2) In example 2 - We have eliminated the previously carrying retained earning of "S" (8,000) while consolidating the retained earnings of both the companies. It may be possible that "S" may have declared the dividends of all 8,000 after it was acquired by "P". Or if not, then may be it can declare in coming next months. My question is, how long this 8,000 will keep on eliminated for how many years? Can there be any event in future which let that 8,000 not to continue further?
2. Are equity shares equal to share capital?
sir i am still unclear about why we are not showing the investment amount and share capital of subsidiary in the consolidated sofp, because the justification you provided that we are bringing the net assets of subsidiary is confusing, because then why are we bringing the retained earnings of subsidiary??
Thanks
i would like to thank you for your teaching, may God bless you
About the consolidated accounts, we do a fair value adjustment when the fair value is higher than the carrying value, what about when the fair value is lower than the carrying amount? do we do an adjustment (negative one) as well?
Thanks.
I have a quick question. I work in a subsidiary company that is involved in selling contents to the Parent at a Mark-up of 5% and VAT of 5% and the Parents company Pay for this service. First question is, while computing the Net VAT to be remitted to the tax authority, is it proper to deduct the VAT that happened as inter-company sales or just concentrate on the VAT output tax charged to other companies
Second During consolidation, how do we treat the VAT element in the PUP and Profit made from sales.
Is it even right to charge VAT in the first place for inter-company transactions.
Thanks
The VAT treatment is not examinable in Paper FA - you need to ask in the Paper TX Ask the Tutor Forum.