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Revaluation surplus in books of subsidiary

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Revaluation surplus in books of subsidiary

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by MikeLittle.
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  • November 30, 2015 at 4:24 pm #286469
    Chandan
    Member
    • Topics: 24
    • Replies: 36
    • ☆☆

    Dear sir,

    Could you please advice on how to deal with revaluation reserve in the books of the subsidiary at the time of consolidation?

    I have noticed a note in the Kaplan study text that it is to be taken in full to group revaluation reserve and not retained reserves so I am a little confused.

    Does that mean that it is to be deducted from the post acquisition profit and shown separately and that it is not to be included in post acquisition reserves along with reserves like share capital, retained earnings etc in workings such as Group retained earnings and NCI for example?

    Thanks in advance for sparing time amidst your busy schedule.

    November 30, 2015 at 7:41 pm #286530
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23327
    • ☆☆☆☆☆

    It all depends upon the dad of the revaluation. If that was dome post acquisition, then the parent’s share will be added to the revaluation reserve of the parent and shown in the consolidation

    If the revaluation existed as at date of acquisition then it’s part of subsidiary net assets (shareholders’ funds) and incorporated as part of the goodwill calculation in working W2

    If the revaluation took place actually on the date of acquisition then it’s as though it had taken place before as in the previous paragraph

    Does that answer it?

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