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Dear Sir
Could you kindly explain the LPS investment audit risk from Winberry question September 2022.
I understand that it should be equity accounted and not consolidated but what confuses me is this part from published answer which says There is no impact on net assets or retained profit of Parents FS.
Kindly explain this
Thank you
It’s explained in the paragraph that follows your quote.
In essence – to consolidate subsidiary is 100% of everything – less the NCI = Winberry’s share, which is the same amounts as under equity accounting. The difference is that under consolidation, control of assets (for example) is shown line-by-line – but under equity accounting you just have the overall effect.
Makes sense. So since it’s 50% that is why essentially impact remains same correct
If Winberry had only 45 % in LPS it will affect the net assets value under consolidation and equity accountingNo it could be any %
100% – NCI% = Parent’s %
A. For a business combination, P’s % is calculated under the acquisition method of consolidation (IFRS 3)
B. For an investment in an associate, P’s % is calculated under the equity method (IAS 28)Both methods will give the same “net result” – the difference is how it is presented in SoFP/SoPL:
A. Present line-by-line 100% – then deduct NCI (as a single amount)
B. Present net amount as single line in each statement
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