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Hi mike, just to say im loving this site.
I have studied AAT and i did Financial Statements Exam that cover iAS cash flows, consolidated acounts etc. when studying Consolidated accounts i would do the following working. i would be interested in getting your thoughts on the below workings.
W1 – goodwill At acquisition
investment X
Share capital Acquired (P share of S share capital at acquisition (X)
Retained Earning Acquired (P share of S Retained Earnings at acquisition (X)
Other reserves acquired (P share of S reserves at acquisition (X)
Revaluation Adjustment attributable to parents ( p share of difference between fair value and book value net assets at acquisition date (X)= Goodwill at Acquisition
Goodwill at acquisition X
Impairment of GW (x)= GW in group SOFP X
W2 – NCI
share capital attributable to NCI (NCI share capital at period end) X
Retained earning attributable to NCI Share at period end ) X
revaluation reserves attributable to NCI (at period end) X
revaluation adjustments attributable to NCI XNCI in group SOFP X
W3 – Retained Earning
100% Parents retained Earning X
P share of S post acquisition Retained earning X
Impairment of Goodwill (X)Retained Earning in group SOFP X
This is how i did it for AAT, i understand F7 is a step up, so i am keen to understand your thoughts on the possible issues with the above.
Thanks Mike
What happens to the NCI element of goodwill? You seem only to be calculating the parent’s share of that goodwill on acquisition
In the NCI calculation you appear to be giving them their share of the retained earnings of the subsidiary from the pre-acquisition period
I suppose that it works because, one way or another, that’s their entitlement
Your problems will start to arise when you compare your answers with the printed solutions in the revision kit / exam kit from one of the reputable publishers because, when your answer disagrees with a printed solution, it’s going to be a difficult task to establish why there is a difference
Is there a problem with learning the way I consistently tackle the issues in the video lectures?
Hi thanks. i have been using it to get the right answers for the questions (all be it the simple ones). there isnt a problem with learning your way its just i only did Financial statements in September and i know the above method.
However i will try and learn your way. final point do you think its worth adding in a net asset working?
Why not continue to use your way with some of the past exam questions?
If it still comes out with the correct answer, why change?
“…do you think its worth adding in a net asset working?”
Not sure what you mean by that
If you’re thinking of tackling post-acquisition results the same way that Kaplan do it, fine, yes! You will need a net assets working
If you follow my method, it all works out automatically in working W3 Consolidated Retained Earnings
Hi mike, doing some past exam papers, this only really works if nci investment value is proportional to net assets. ive decided to learn your way as its not too difficult. Thanks for the Help.
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