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Let’s assume P acquires S and in S they have a revaluation surplus of 100. How will the revaluation surplus be recorded in the consolidated SFP and also is the revaluation surplus included in the goodwill calculation under FV of idenfiable net assets
Thanks in advance 🙂
The revaluation surplus is a reserve and is treated like all the other reserves on consolidation, i.e. we recognise 100% of the parent’s plus the parent’s share of the post acquisition movement i the reserve. So only the movement in S’s surplus will be included at the reporting date.
It will form part of the net assets calculation as the increase in value will have been reflected in the value of PPE, being a part of the net assets of the subsidiary.