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hi, may i know inside the conso statement , the share capital do i need to include any of the consideration amount on goodwill when the question it says that parent has not recorded any of the purchase consideration. how do i need to include it? thank you
If the purchase consideration for the acquisition of the subsidiary has not yet been recorded (if there is any cash payable on the acquisition date, that will have been recorded) then of course you need to make adjustments to the parent’s statement of financial position
If shares are involved in that acquisition, you need to take the following steps:
Calculate the NUMBER and value of shares issued by the parent
Cr Share Capital with the $ value of the number of shares issued x nominal value of the individual shares
Cr Share Premium with the overall value of the share issue – the nominal value that you have just credited to Share Capital
If loan notes are issued as part of the acquisition cost you’ll need to include those within the long-term liabilities of the parent
There will probably be outstanding interest on those (un)recorded loan notes so you’ll need to reduce the parent’s retained earnings by the accrued interest and increase current liabilities by that same figure
If there is deferred cash (un)recorded don’t forget to discount the amount payable and then unroll the discount at each successive year end Dr Retained Earnings (finance costs) and Cr Deferred liability
Does that do it?
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