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Basic group structures – SFP workings and adjustments – ACCA (SBR) lectures

VIVA

Reader Interactions

Comments

  1. tbellz says

    January 16, 2024 at 8:45 am

    Could you please clarify why the NCI at acquisition is added to the FV of consideration (as against adding it to what is being acquired) as though the investor is the one bringing the NCI as part of the purchase consideration?

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    • Pooja says

      March 2, 2024 at 8:10 pm

      My understanding says, NCI is added, because you are deducting the net assets value of 100% of subsidiary. When you purchase a subsidiary you buy 50% or more , through consideration. the other 50% is NCI = total 100% of Subsidiary cost (consideration) less FV of Net Assets, will provide goodwill for the entire subsidiary. I hope I am able to explain properly.

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    • astrxphoria says

      October 3, 2024 at 5:00 am

      Goodwill is the value of a company (market valuation) in excess of the company’s net assets.
      i.e. Goodwill = Value of company – Net assets

      Remember NCI is what the acquirer did not buy. So for example, if acquirer buys 51% of the company, we assume:
      Value of company (100%) = FV of consideration (51%) + NCI at acquisition (49% balancing figure)

      Therefore:
      Goodwill = (FV of consideration + NCI at acquisition) – Net Assets
      ^ which is basically the proforma

      Related topic if you like to overlearn is ‘business valuation’ (recall from FR: net book value if the company is about to liquidate, market capitalization, etc.).

      https://www.investopedia.com/terms/b/business-valuation.asp

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  2. Keensley91 says

    September 19, 2022 at 2:51 pm

    How come we deduct all of the impairment in the associate for the Group Retained Earnings and Investment in Associate Calculations, instead of just the parent’s % ownership like we do with a subsidiary?

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  3. prka89 says

    December 4, 2021 at 6:00 pm

    3:12 impairment goodwill every day? – i suppose it should be once a year

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    • Jeby says

      January 21, 2022 at 6:47 am

      Impairment test on goodwill have to be done every year. (IAS-36)

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      • astrxphoria says

        October 3, 2024 at 3:57 am

        Or when there is an indication of impairment (also IAS 36).

  4. AOlalere says

    September 22, 2020 at 2:31 am

    Please if the subsidiary’s year end is more than 3 months after the parent’s year end, do you consolidate?

    Also, if it is within 3 months after, or 3 months before the parent’s year end, what do you do exactly? You mentioned something about adjustment, how is this done? Thank you.

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  5. manishatai says

    September 12, 2020 at 3:16 pm

    Hi – who is the NCI?

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  6. arunotes says

    September 7, 2020 at 4:47 pm

    hi sir, may I know what does that means non-cotermious YE? I not really understand about this part.

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    • patkev says

      October 17, 2022 at 11:22 pm

      Non-conterminous year end from my understanding means both parent and subsidiary have different year ends, meaning they are not consistent

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  7. olabisijacobs says

    May 25, 2020 at 2:13 pm

    Pls what does PUP mean or represent?

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    • MikeLittle says

      May 25, 2020 at 4:50 pm

      Provision for Unrealised Profit

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      • olabisijacobs says

        May 28, 2020 at 4:49 pm

        Thank you

    • wisecrack says

      May 26, 2020 at 4:49 pm

      Profit on unrealised profit

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      • wisecrack says

        May 26, 2020 at 4:50 pm

        Sorry provision for unrealised profit

  8. khinemiemielwin says

    May 15, 2020 at 7:20 am

    Hello sir,

    I want to know changes in fair value of net assets acquired after acquisition date’s journal entries. I noted that we can re-adjust retrospectively if that changes meet conditions. So, if fair value of net asset increase, should we re-adjust as debit in group’s non-current assets and credit in subsidiary’s post profit?

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  9. Zura says

    May 10, 2020 at 1:20 pm

    The explanations and illustrations is great, thank you tutor.

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  10. misbahkiran says

    March 15, 2020 at 9:54 pm

    fantastic lecture…you are an amazing teacher..

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  11. kemkemm says

    February 2, 2019 at 11:16 am

    Based on PUP, if associate sells to parent, why do we debit w5 when parent and associate aren’t consolidated? If associate is selling to parent, the profit sits with the associate isn’t it? And if that’s the case then the parents retained figures aren’t affected.

    Is this right?

    Thanks for your help.
    Sarah

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    • P2-D2 says

      May 24, 2019 at 11:25 am

      Hi,

      It is a bit odd but regardless of the direction of the transaction, the entry is to debit the share of profit of associate (SPL) and credit the investment in associate (SFP) with the investor’s share of the profit.

      Thanks

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  12. laylluli says

    September 1, 2018 at 2:04 pm

    hi sir, i am a little bit confused about that at the end of lecture, referring to adjust unrealised profits P to A, why need to Cr. Investment in A?

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    • P2-D2 says

      January 4, 2019 at 9:20 am

      Hi,

      We would normally take the entry to the inventory but as the inventory is in A’s books we cannot take it there as A’s inventory is not included within the group accounts. We therefore have to take the entry to the only element of the associate that is included within the group accounts, and that is the investment in associate.

      Thanks

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