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Hi everyone,
I have learnt from the Kaplan Book the way to do the working when in comes to carrying out the consolidation i.e 1. group structure 2. net asset of s 3. goodwill 3. minority interest .etc. and now having watched some of the video in this site the tutor actually teaches to do this in a different way i.e 1. group structure 2. goodwill 3. group profit and so on.
My question is is there a particular way of doing the working and numbering it or it is up to us.
Thank in advance
i think, there is no particular way defined to show ur working in either of sequence u mentioned.
u can show ur working, the way u find the most easy, it is up to u, all u have to care is just put working number reference correctly.
i also personally believe that working of group structure should be given working number 1 (logically better) and the rest is up to u,- Topics: 0
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To prepare consolidated statement, I am sticking this templet:
(W1) Group structure
(W2) FV Purchase consideration if question is complicated (for example: Consideration include: cash consideration, deferred consideration, share exchange, loan notee can….), I often separate it.
(W3) FV adjustment of asset of sub @ acquisition
FV adj = FV – CV
-Additional depreciation
Net FV adj
(W4,5,6…) All adjustments based on notes in questions (investments, loan note, intra-trading company, intra-transfer of fix assets…)
W4,5,6… should show all adjustments (if any)
(W7) Group g/w @ acquisition date
Group g/w = G/w of Parent + G/w of NCI
G/w = FV consideration(W2) – Groupshare of FV (*) of Net asset (**) of Sub@ acquistion
–> Net g/w = G/w – Impairment (if any)
Then, need to allocate Impairment g/w to Parent & NCI per proportion –> Remaining g/w of Parent + Remaining g/w of NCI
(*) FV = FV adj (W3)+ CV
(**) Net asset = Equity
(W8) NCI @ B/S date
+ Groupshare of net FV (***) of net asset of subsidiary @ B/S
(***) Net FV = Net FV adj (W3)+ CV
+ Remaining g/w of NCI (W7)
– Groupshare of URP(if Sub sells goods to Parent)]
(W9) Group Reserve @ B/S date
+ Reserve of Parent – Impairment g/w to Parent (W7) – URP (if Parents sells goods to Sub)
+ Group share of [post acquisition Reserve of Sub – Additional depreciation (W3)-URP(if Sub sells goods to Parent)]In my experience, Group structure is the first step.
NCI & Group Reserve should be put at the end after you made all adjustments. Please read each notes carefully and find out their impacts .
I find exercices of consolidation very easy to make us confused and disorder if we can’t outline every steps.
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