Basic group structures - SPLOCI introduction and example - ACCA (SBR) lectures
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29 Comments
S
Shikha·
Why didn't they consider impairment in calculating (e) - Share of profit of associate? As per the proforma, we deduct full impairment from share of profit of associate, so it should be 25-6 = 19. Right?
J
jyoti·
at 16:45 I want to ask why is revaluation surplus not included ? and also in the end it says assume that profit accrue evenly during the year does that have any effect on the revaluation gain of s in group OCI ?
T
Thien An·
1. It's not "note included", he corrected the figure (Parents' reavaluation gain should be 100)
2. It's a matter of judgement, you can either explain that
+ The revaluation gain was made at year end so recognition of gain should be reflected in full in Group OCI at year end as the Gain was made after acquisition.
+ On the assumption of evenly accrued, gain can also be allocated evenly in 12 months >> So only half of 50 revaluation gain in Maul's separate FS should be reflected in Group OCI.
J
jyoti·
at 16:45 the question does say ‘Assume that profits accrue evenly during the year’. Are revaluation gains treated as profits, and therefore should that 50 also be accrued evenly during the year? Or is the revaluation treated as a single event, being applied fully at the time of revaluation?
also I want to ask why is revaluation surplus not included ?
K
kiki16·
Hello, why do we take 100% of subsidiary revaluation gain and not 80%? Thanks
Y
Yash·
This is because the parent controls the subsidiary. It is more about performance of the S. And anyway, the NCI’s share of the profit is given to them at the bottom of the Income Statement. The OCI forms part of the Income Statement.
We take the whole figures for items in the Income Statement (Time apportion them of course, unless they occurred post-aquisition), then at the end allocate them to the NCI based on their %.
You can see for the NCI (part f), he took the whole value for PAT and impairment BUT he multiplied by 20% at the end because it was for the NCI.
But for the balance sheet, it is more about ownership and control. The NCI is not shown in the consolidated/group BS. Only the parent’s % in the subsidiary.
T
Tolu·
Why is Dividend from S/A reporting as an item in the SPLOCI?
E
Emeke·
Why didn’t we apportion group revenue, group admin expenses and group OCI to reflect % in subsidiary?
Y
Yash·
This is because the parent controls the subsidiary. It is more about performance of the S. And anyway, the NCI's share of the profit is given to them at the bottom of the Income Statement.
But for the balance sheet, it is more about ownership and control. The NCI is not shown in the consolidated/group BS. Only the parent's % in the subsidiary.
S
Siddig·
In example 4 – The Goodwill impairments are ((recorded)) in administrative expenses. when calculating the NCI in PAT of Maul, Why reducing the profit (PAT) by subtract the impermeant if it recorded in the admin expenses .
and when calculate the admin expense it should be 90+((50-6)*6/12)+6=118 if the impairments are recorded
P
Philippa·
Hi, in part A is it standard practice NOT to include the Parent's share of Associate revenue in the group Revenue? Thanks
A
Anna·
Why we did not apportion Maul revenues for 80%, but took whole 100%? How to know when apportion figures in FS for % owned and when not?
P
Philippa·
Watching..
E
Ezekiel·
Just joined newly,this is the same question i have as well, why did we take 80% of Màul?
C
cardine·
As per share holding
N
Nikhil·
this is the first rule when are doing consolidation we are doing consolidation line by line of each item (without apportioning of figures) we do apportion of figures only for retained earning
Y
Yash·
This is because the parent controls the subsidiary. It is more about performance of the S. And anyway, the NCI’s share of the profit is given to them at the bottom of the Income Statement.
But for the balance sheet, it is more about ownership and control. The NCI is not shown in the consolidated/group BS. Only the parent’s % in the subsidiary.
L
ltavros·
Nice Star wars Reference :p
C
Christopher·
At 16:45 you've put 100 for the Parent and 50 for the subsidiary - but total still says 140. I'm assuming the answer is 150.
Also - the question does say 'Assume that profits accrue evenly during the year'. Are revaluation gains treated as profits, and therefore should that 50 also be accrued evenly during the year? Or is the revaluation treated as a single event, being applied fully at the time of revaluation?
A
Alexa·
How come the £20 million that Vader sold to Maul doesn’t get taken off in part f - NCI in PAT of Maul? I thought we would need to remove this from cost of sales, which would then reduce PAT? Thank you for any answers :)
A
Alexa·
I meant increase* PAT ?
A
Abhishek·
I think the £20m only gets taken off when its the subsidiary (Maul) that sells to parent (Vader). In this case its the parent selling to subsidiary
C
chiranjeevgopichand·
Inter company sales are added to group COS not individual S Co (seperate entity concept). Therefore, it doesn't affect NCI share of S CO PAT
T
Thien An·
Because the transaction affected the Revenue and COGS of Vader, not Maul
Z
zilyenge·
Why was the whole impairment amount of 6 subtracted first from Sub's PAT ? Instead of just getting the NCI's share of 6 , then subtract it from PAT??
L
lasella·
We deduct 100% of impairment from the subsidiary. only at the end after calculating the PAT and TCI do we separate out the NCI portion
A
amanlalshrestha·
Can you please give me the answer for example no 3.
E
elshadbaku2002·
Hi when do we put impairment in P' s collumn? Can you provide explanation please.
P
P2-D2Tutor·
Hi,
If the goodwill is measured using the proportionate share method then we would include the impairment in P's column so that the NCI does not get their share of it.
2. It's a matter of judgement, you can either explain that
+ The revaluation gain was made at year end so recognition of gain should be reflected in full in Group OCI at year end as the Gain was made after acquisition.
+ On the assumption of evenly accrued, gain can also be allocated evenly in 12 months >> So only half of 50 revaluation gain in Maul's separate FS should be reflected in Group OCI.
also I want to ask why is revaluation surplus not included ?
We take the whole figures for items in the Income Statement (Time apportion them of course, unless they occurred post-aquisition), then at the end allocate them to the NCI based on their %.
You can see for the NCI (part f), he took the whole value for PAT and impairment BUT he multiplied by 20% at the end because it was for the NCI.
But for the balance sheet, it is more about ownership and control. The NCI is not shown in the consolidated/group BS. Only the parent’s % in the subsidiary.
But for the balance sheet, it is more about ownership and control. The NCI is not shown in the consolidated/group BS. Only the parent's % in the subsidiary.
and when calculate the admin expense it should be 90+((50-6)*6/12)+6=118 if the impairments are recorded
But for the balance sheet, it is more about ownership and control. The NCI is not shown in the consolidated/group BS. Only the parent’s % in the subsidiary.
Also - the question does say 'Assume that profits accrue evenly during the year'. Are revaluation gains treated as profits, and therefore should that 50 also be accrued evenly during the year? Or is the revaluation treated as a single event, being applied fully at the time of revaluation?
If the goodwill is measured using the proportionate share method then we would include the impairment in P's column so that the NCI does not get their share of it.
Thanks