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P2-D2.
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trainee1
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Dear Chris,
Hope you are fine and thank you for your great lectures.I just have a short question regarding full disposal of subsidiary. Suppose the parent company sells its ONLY subsidiary during 2017. So at the year end we have to prepare consolidated PL and consolidated SFP.
It is obvious for me that the consolidated PL is NOT the same as the individual PL of the parent.
BUT what about the SFP? I believe the consolidated SFP must be EXACTLY the same as the individual SFP of the parent? So I mean although the calculation of profit on subsidiary disposal at the individual book) is not the same as the calculation of profit on subsidiary disposal on the consolidated SFP, but eventually these both lead to the same retained earning balance at the year end because the RE on both individual SFP and and consolidated SFP must be the same. Correct????So I mean at the year end the parent company has to make :
1- Individual PL
2- Consolidated PL
3 – Individual SFP which is exactly the same as Consolidated SFPHope my question is clear …
Thank you very much
P2-D2
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Hi,
I’m well, thanks. Glad you’ve enjoyed the lectures too. I’ll be looking to add more to them in the near future.
You are correct in that the individual SPL is different to the Group SPL, as in the group accounts the subsidiaries results will be included for the full twelve months.
The group SFP will only include the assets and liabilities of the parent as we no longer control those of the subsidiary. In that way it will look identical to the SFP of the parent.
I like how you’e thought this through and used your knowledge to get to your answer, well done. The only think I’d say though is that I doubt you would see the group SFP as a full question like this, it would much likely be the group SPL.
Keep up the good work.
Thanks
trainee1
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