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Group Accounts The Consolidated Statement of Financial Position (2a) – ACCA (FA) lectures

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  2. Greetings. Really great series on Consolidated Statements.

    I wanted to ask, why when calculating Goodwill, did you write down share value as $10,000 to subtract from – by checking the SOFP instead of $8,000 (80%) which is the price they paid under Investments? Shouldn’t this be the price the value should be subtracted from , to find the balance of Goodwill ?

    Also, when share value for S is shown as $10,000 in the SOFP, is it the fact that the $8,000 (80%) shares bought at incorporation are now worth $10,000 on this date ? Or is it the share worth of all shares including that of the non controlling interest ? If it includes that of the NCI, then why did we have to assume initially their fair value is 2,000 when it is quite obvious : 10,000 – 8,000 (P) = 2,000 (S) being the balance.

    • The goodwill is the total value of S at the date of acquisition less the value of S on the SOFP at the date of acquistion.

      The total value of S at the date of acquisition is the amount P paid for their share (8,000) plus the value of the NCI (which is the other $2,000).

      In S’s SOFP the share capital is (as always, nothing to do with consolidations) the total nominal value of the shares in issue – there are 10,000 $1 shares.

    • We don’t.
      Firstly it is the fair value at the date of acquisition plus the NCI’s share of the post-acquisition retained earnings.
      Secondly we show it separately because it represents the part of the group’s net assets that belongs to the NCI as opposed to that owned by the shareholders of the parent company.

  4. Thank you so much!! I have been so scared of Group Accounting and decided to come back to FA to really learn it and this has been a life saver! Feeling a lot more confident. I have just completed this and the previous 2 lectures on consolidate SFP and it all makes sense now!

    You are the best!

  5. Hi John,thanks for the lecture.I had adoubt regarding th consolidated accounts and the non controlling interest.
    Why do we not calculate only 80% of non current Assets,current assets and current liabilities when making a consolidated account?
    Can you please clarify that.

  6. hi!
    I did not understand this video at all…
    watched it over and over again, I am confused why in P’s accounts there are non -controlled numbers instead of controlled ? and completely lost where are figures then from P controlled accounts?

    • Have you watched the lectures on the previous chapters first?

      I do not know what you are referring to when you mention ‘non-controlled numbers’ – I do not use those words and nobody uses those words 🙂

      P and S are completely separate legal entities and produce their own financial statements. P’s SOFP is showing P’s own assets and liabilities.

      The consolidated SOFP is showing it as if there was one big company – it shows the total of P and S’s assets and liabilities just as though it was one big company. However when we come to show the share capital, retained earnings etc., it is there that we show how much of the total net assets belong to shareholders of P and how much of the total belongs to the non-controlling interest.

    • Because we are required by accounting standards to show the group as though one big company – so all assets and all liabilities. The fact that 20% of S is owned by the minority is dealt with in the minority interest calculation.

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