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Dear Sir,
How can I explain the reason of below?
The share capital in the consolidated financial statement of financial position is the
share capital of the parent company alone. This must always be the case, no matter how complex the consolidation, because the share capital of subsidiary compainies must always be a wholly cancelling item.What is the reason?
3marks to explain. Could you let me know how to answer this?The consolidated financial statements are prepared for the benefit of the members of the parent entity
It is therefore only the shares capital of the parent entity that features in the consolidated financial statements
The share capital of the subsidiary is part of the calculation of “Fair value of subsidiary net assets as at date of acquisition” because fair value of subsidiary net assets as at date of acquisition is, by definition equal to the shareholders’ funds (fundamental accounting equation learned at F3 level) and is therefore an integral element of the calculation of goodwill
OK?
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