W2-gw and pyq

With reference to share premium and whether to include the figure or not …

… if, on the date of acquisition, there is a share premium account balance on the subsidiary’s statement of financial position, that figure represents part of the subsidiary’s financing of its net assets (F3 topic … capital employed = net assets)

So, when using the figure for “Fv of SNA @ doa” we take the various figures from the subsidiary’s statement of financial position (share capital, share premium, retained earnings, any other reserves that existed as at the date of acquisition + any fair value adjustments (in the exam, these are normally identified as “at the date of acquisition the fair value of the subsidiary’s assets were approximately the same as their carrying value with the exception of …”))

So, where the share premium figure relates to the subsidiary, we include that share premium amount as part of the calculation of “Fv of SNA @ doa”

But share premium could also appear within a consolidation question …

… where the parent issues shares as part of the purchase consideration, those new shares being issued by the parent will most likely be issued at a value greater than their nominal value ie they will be issued at a premium

This time, the premium involved is included within working W2 Goodwill as part of the Cost of Acquisition ((any, any combination or all of) shares issued, share premium on those new shares, deferred cash, immediate cash, loan notes and fair value of nci)

Is that clearer now?