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Hi there, firstly thank you soo much for the lectures and notes, they are amazing!
!)
I am a little confused with the rev surplus in the CSOFP.If we acquired a subsidiary say half way through the year (say 80% of subs control), and they made a gain on rev say 1,000 during the year, what would the figures be in the CSOFP for rev surplus under equity section? i am right in assuming we would firstly time apportion gain, so now 500, then only add our % of control(80%), so it would be 400? then obv 100% of any rev gains on parent comp, so lets say parent comp had gains of 10,000 during year, total consolidated rev surplus = 10400?
If i had to do a CSPL, the rev surplus in OCI , would it be 11000? and then after profit for the year, i would have to work out the NCI calc?
Hope i explained this clearly enough?
Thank you in advance
Martin
Hi Martin,
Glad to hear that you’ve enjoyed the lectures and the notes.
If there was a revaluation of PPE within the subsidiary following the acquisition then we would treat it in the same fashion as the retained earnings, as they are both part of the group’s reserves. We would therefore have 100% of P’s retained earnings and add on P’s% of S’s post-acquisition reserves. The key here is that it is the post-acquisition movement, so we would not be pro-rating the revaluation and you would be taking 80% of the 1,000, to give 800 as opposed to your 400. We do not pro-rate as the revaluation does not accrue over a period of time like the revenue and costs do, it arises at a point in time and so the parent has control of the revaluation.
With regards to the group SPLOCI then the revaluation would be shown in full and not pro-rated as it arises at the point since we have control and has not accrued over the full year.
Hope that answers the question for you and that I’ve understood it correctly.
Thanks
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