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September 19, 2020 at 5:14 pm
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.
John Moffat says
September 20, 2020 at 8:42 am
We are replacing the investment in the subsidiary with the assets of the subsidiary.
September 16, 2020 at 4:37 pm
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?
February 2, 2020 at 1:43 pm
39000+7000=46000, not 45000
February 2, 2020 at 1:47 pm
ohhh sorry, I copied the exercise wrong 🙂 thats why it didnt matched with me at the very end
August 30, 2019 at 6:16 pm
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?
April 27, 2019 at 9:14 am
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??
April 27, 2019 at 9:40 pm
You will know from the very earliest FA lectures that net assets are equal to share capital plus reserves.
April 28, 2019 at 8:46 am
i would like to thank you for your teaching, may God bless you
December 13, 2018 at 1:48 pm
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?
December 13, 2018 at 4:16 pm
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.
November 9, 2018 at 8:38 am
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?
September 29, 2018 at 12:07 pm
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.
September 30, 2018 at 9:53 am
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.
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