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Hi Sir, I was wondering whether the interest arises on intra group loan affects the workings for CSOFP.
Will it affect the net assets of s (Post acquisition). That in turn will affect the working of NCI?
Hi,
We need to make sure that the interest is correctly recorded first in the CSOFP, i.e. any cost/income in retained earnings and then any outstanding payable/receivable.
Once this has been recorded in the correct places for the parent/subsidiary then any adjustment to S’s retained earning in the net asset working will then flow through to the NCI working and Group RE working.
Any outstanding intra-group balances will finally be eliminated on the face of the CSOFP.
Thanks
Ok Sir. But what if the question does not specify if it was recorded in the correct places. What should i assume when doiing my calculation
You should always assume it has been done correctly unless otherwise stated. It would then specifically state what has been done wrong.
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