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In one of your F7 video youy described a short cut way to treat revaluation reserves or any other reserve which was to treat it within W3 Con Ret Earnings what exactly was ur approach? Thanks in advance
Just that! Where there is a fair value increase in a subsidiary’s assets at date of acquisition and the asset is still in the subsidiary’s possession at the balance sheet date, I suppose technically I should open a Revaluation Reserve to record that fair value increase.
For working W3 Consolidated Retained Earnings I include any required revaluation reserve arising on acquisition within the retained earnings calculation.
That’s all 🙂
If there is already a revaluation reserve in the individual financial statements at end of year should we then add ret earnings and Reval reserves per q fig also ?
No, better not to.
If there is already a Revaluation Reserve in the subsidiary as at the date of acquisition (that would be most unusual in an F7 exam question) then for the purposes of fair value adjustments for TNCA and INCA (like brand names) then use the Revaluation Reserve.
But if there isn’t (it may be technically incorrect, but) put through the fair value adjustments in the retained earnings
OK?
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