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Dear All,
So Parent ‘P’ owned 70% of subsidiary ‘B’. Mid Year 2015, it bought another 30% of the subsidiary. I am wondering what would the difference in workings be?
1- How will FV of Net assets working change?
2- Will Goodwill calculation Change? Goodwill at acqn calculation will be at year start or when the extra 30% was bought?
3- How will we calculate transfer from NCI?
4- Effect on CI?
5- I am guessing Reserves wont be affected?
6- Anything else that would change?Please guide if my assumptions are correct and what how will the calculations go about? Would love if you use numbers to explain.
Havent catched up with IFRS 3 since 2015. 🙁
Hi,
This is fundamental knowledge if you are to attempt any question on group accounts in the exam.
1 – The net assets working does not change. It is only calculated at the acquisition date and at the reporting date. The acquisition date will have been when we first gained control of B, probably when we bought the 70% holding.
2 – As we are already treating B as a subsidiary then we will already have calculated the goodwill and therefore there is no further adjustments to our original figure following the extra 30% that has been purchased.
3 and 4 – CR Bank DR NCI (this will be with the remaining NCI at the date the additional 30% holding was acquired) DR Group RE (as a balancing figure)
5 – The effect on the controlling interest impacts the group retained earnings (see double entry above).
6 – You would need to consider the impact on the NCI in the group statement of profit or loss because you need to pro rate the results to work out the NCI (30% for six-months and 0% for six-months)If you haven’t touched this since 2015 and have your exam on Tuesday then I suggest that you put in some serious hard work before then!
Good luck
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