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Hi,
Can you help me please? Portus Co bought Sanus as subsidiary at 01.04.2004 (80%). Individual SPLOCI shows us Gains on property revaluation £900,000 for Portus and £400,000 for Sanus at year end 31.12.2004.
What figure do we include in consolidated SPLOCI for the group for revaluation please?
Many thanks
Katya
Revaluation reserves are calculated just like retained earnings.
Group revaluation reserve = P’s revaluation reserve + 80% of S’s changes in post-acquisition revaluation reserve.
Hence, group rev. reserve=900+80%*400 =1220Hi
Does it not matter that there is 9 month period between acquisition and year end?
Hi,
Technically you need to know the gain on revaluation in the subsidiary for the 9-months since acquisition. However, this is likely to equate to the full amount of the gain as the revaluation usually takes place at the reporting date and so we have control of that gain at that point in time.
We’d need to read the specifics in the question as it can either say that all gains/losses accrue evenly, so we’d pro-rate, or gains/losses on revaluation arise at the reporting date, so we’d not pro-rate.
Thanks
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