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Hi, will and how consolidation takes place if business combination took place on last day of financial year?
Hi,
The process is the same as if we’d acquired it on any other day of the year. On the SFP we would calculate goodwill, NCI and group RE and add across 100% of S’s assets and liabilities on a line by line basis.
On the SPL you need to be careful as here we have only owned the subsidiary for one day of the year so you’d need to pro-rate the results of S before consolidation (x 1/365). I doubt that this would arise in an exam question though.
Hope that helps
Thanks
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