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fair value adjustment and revaluation gain in OCI

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › fair value adjustment and revaluation gain in OCI

  • This topic has 8 replies, 4 voices, and was last updated 9 years ago by MikeLittle.
Viewing 9 posts - 1 through 9 (of 9 total)
  • Author
    Posts
  • November 17, 2015 at 7:21 am #283209
    accalmz
    Member
    • Topics: 19
    • Replies: 12
    • ☆

    Dear sir,

    Just would like to confirm that if the subsidiary has recognized the fair value adjustment on its asset when it is acquired (in its OCI and balance sheet), then for consolidation of the group OCI, the parent does not need to consolidate the adjusted amount. In this scenario, the parent just need to consolidate its own OCI and the post-acqusition OCI of subsidiary.
    Thank you!

    regards
    Lm

    November 17, 2015 at 7:51 am #283226
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    If, on acquisition, the subsidiary has recorded Dr Asset Cr Revaluation Reserve then you are correct in saying that ant the only Revaluation Reserve to be consolidated is the parent’s together with any post-acquisition movement in the subsidiary Revaluation Reserve

    November 27, 2015 at 5:08 pm #285761
    xinyi0711
    Member
    • Topics: 4
    • Replies: 16
    • ☆

    Hi,what scenario need to put the value into the OCI?if the gain on the NCA of the parent no matter post /pre need to put inside?hw abt the subsudiary’ s adjustment?

    November 27, 2015 at 7:57 pm #285795
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    We are only ever interested in consolidating the subsidiary’s post-acquisition matters. Anything pre-acquisition is incorporated into the goodwill calculation

    November 28, 2015 at 12:47 am #285825
    xinyi0711
    Member
    • Topics: 4
    • Replies: 16
    • ☆

    The parent’s pre or post also need to incorporate into oci…Am I right?

    November 28, 2015 at 1:41 am #285830
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    The consolidation exercise is to show what has been achieved whilst under the parent’s control. Do the results of the parent fall into that category?

    March 13, 2016 at 11:16 am #306164
    Anonymous
    Inactive
    • Topics: 43
    • Replies: 124
    • ☆☆

    Hi Sir,

    Sorry to bother you and hijack in this particular question. It’s just that I googled a question and I think the thread here may be of relevance:

    In question 3, Section B of Dec 2014 F7 exam, the examiner asked us to prepare the consolidated statement of profit or loss and other comprehensive income.

    The note (i) describes that the property of the subsidiary had a fair value of $4 million above its carrying amount, and $100,000 extra depreciation post acquisition. Then at the reporting date on 30/Sept/2014, a further increase of $600,000 in value of the subsidiary’s property since its value at acquisition and 30/Sept/2014 has not been recorded.

    In the consolidated OCI, only $600,000 of revaluation gain is included, but not the $4million at acquisition minus $100,000 depreciation post ante.

    In your reply at thread 4 here, your saying:
    “We are only ever interested in consolidating the subsidiary’s post-acquisition matters. Anything pre-acquisition is incorporated into the goodwill calculation”

    Am I correct in understanding that this is the reason why the $4million minus $100,000 dep’n is not included in the consolidated OCI?

    Thanks.

    March 13, 2016 at 11:34 am #306165
    Anonymous
    Inactive
    • Topics: 43
    • Replies: 124
    • ☆☆

    Also continue above scenario, say the $3900 ($4000 – $100) gains on revaluation is included in the subsidiary’s OCI, we must deduct it from the sub-total when we consolidate the group’s OCI?

    Thanks

    March 13, 2016 at 10:47 pm #306248
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    The reason that the pre-acquisition revaluation is not included in OCI is because …….. it’s pre-acquisition

    The post acquisition movement IS included in consolidated statements and is not deducted / eliminated

    Ok?

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