FRConsol question

Before IFRS3 revised, we used to include it as part of the cost of acquisition.

However, following the revision, it should now be expensed in the year it was incurred

Thank Mike.

One more query on consol, if parent sold assets to subsidiary at the date of acquisition let said FV of $4 and the carrying amt prior to sales was $ 3m, what is the adjustment ?

Thanks

Best Regards

Christine

"at date of acquisition"? Ok, need to eliminate pup in parent's records and adjust for the excess depn which S will have charged

In P, reduce TNCA and Ret Ears by 1m pup

In S, increase TNCA and Ret Ears by the depreciation element based on the excess 1m profit

If p would have depreciated the asset by say 300 and now s has depreciated it by 400, then the excess depn is 100. so, in S, increase TNCA by 100 and also increase S Ret Ears by that same 100

Dear Mike, I'm a bit confuse. Let said the estimated remaining life of the assets at the date of acquistion of sales was 5 years (straight line method), what is the double entries for all ?

Thanks

Kind Regards

Christine

Parent will record the sale as 4,000 and recognise a profit of 1,000.

Subsid will record the purchase at a value of 4,000

Subsid will depreciate the asset at 800 pa

Now, eliminate the pup in the parent:-

Dr Ret ears in parent and Credit TNCA with 1,000 pup

In Subsid we need to adjust for the "excess" depreciation - they are basing depreciation on a cost of 4,000 but, for consolidation purposes, depreciation should only be being charged on 3,000. Subsid will have charged 800, but for consol, it should only be 600 ( ie 3,000 / 5 )

So, in Subsid's records we need to:-

Dr TNCA 200 and credit ret ears 200

NB BPP are inconsistent in their approach and will sometimes do it as above, but sometimes make a NET adjustment in the parent of 1,000 pup - 200 excess depreciation ie a net 800