Group Accounts The Consolidated Statement of Financial Position (2b) – ACCA (FA) lectures
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Hi Sir,
Great lectures as always, massive help! thanks!
Just wanted to understand NCI calculation. In example 3 of CH 23, the FV at data of acquisition was given and we simply added the share of post acquisition profits from retained earnings to this to get the NCI. However, in example 7 of this same chapter, NCI also includes the percentage of share capital as well as percentage of post acquisition profits….why didn’t we add percentage of share capital in example 3? as the formula in Kaplan book also states to use percentage of share capital in NCI calculations. Kindly clarify, thanks!
In example 3 we are told the date of acquisition – it was acquired on incorporation (i.e. when the subsidiary was first formed). So at the date of acquisition the subsidiary had not earned any profits and so the fair value is simply the share capital.
In example 7, the acquisition was later and so the subsidiary will have been earning profits. So the shares will have been worth which is why we need the fair value 馃檪
Sir passed FA with 89% marks by just listening to your lectures. but now i am studying FR from other teacher and i am unable to clear my concepts. i wanna study your lectures of FR if available. thanks
Congratulations on passing Paper FA 馃檪
Our only lectures for Paper FR are those given by our Paper FR tutor.
Hi Sir,
in the example 2 ” P acquired 60% of the shares in S on 1 January 2007 when the retained earnings of S stood at $6,000, the fair value of the non-controlling interest at the date of acquisition was $30,000.”.
When i calculate the the fair value of non-controlling interest at the date of acquisition, I got 26666.67 usd vs the given 30k usd. May you explain?
=(% of NCI in subsidiary / % of parent company control in subsidiary ) X Parent company investment in subsidiary
= ( 40 % / 60% ) x 40k usd
=26666.67 usd
But the question tells you the fair value of the non-controlling interest at the date of acquisition.
Hi Sir,
Yes, i know. But if the question did not tell, is my calculation correct? 26666.67 usd ?
No, because the question says that it is $20,000 !!
Thank you so much sir
You are welcome 馃檪
Why was the total goodwill of 44,000 taken in to the consolidated SOPF when the parent only owned 60% and paid only for the 60% of the shares of S
The consolidated SOFP is showing the total assets and liabilities of the group – not just the parent’s share of them.
Sir, I have two questions.
1. What do we do if the subsidiary had pre acquisition retained losses?
2. In the exam, will we have questions where the parent is buying two companies or is buying one company and is an NCI in another?
wonderful lecture. sir i was wondering why we take the goodwill arising on consolidation as whole and yet P did not own S 100%. i feel we calculate the percentage of goodwill for P share in S just like we did to retained earnings. please explain.
We are treating the group as if one big company. If the parent does not own 100% then the part owned by the NCI is shown as owing to them separately.
Well delivered lecture sir like always ! Make difficult things easier.
I’m finally getting group accounting. Thank you!
Enjoyed the lesson. But just wondering why when determining the value of subsidiary ( to calculate Goodwill) we only use S share capital,S retain earnings at acquisition and fair value adjustment . Why don鈥檛 we add value of assets for the Subsidiary at acquisition to determine the value of S ? Feel Goodwill end up being over stated .
The net assets of a business are always equal to the share capital plus reserves.
one of the best lectures i have attended
Thank you for your comment 馃檪
Dear Mr Moffat,
Now I understand everything, It feels so wonderful!
It鈥檚 virtually the same thing we have been doing when P acquires 100% of S. I hope my exam in 2days has a lot of this as questions. Thank you very much.
Thank you for your comment 馃檪
hi Sir i didnt get the concept of Fair Value i mean we didnt pay it to the Subsidiary we just decided the value that should be why we are calculating it in our statements? Thankyou