Financial Accounting Consolidation
EBC4074 Financial Accounting Consolidation
Wholly owned subsidiaries & Intragroup transactions
Seminar 1 - Réka Felleg
School of Business and Economics
Sharing Success
Agenda
• • • •
Key steps Problem 22.4 Break (?) Problem 23.3
Seminar 1 - Wholly owned subsidiaries & Intragroup transactions
Slide 2
Key steps
• Acquisition analysis – Identify an/the acquirer – Determine the acquisition date – Recognize and measure FV of identifiable assets acquired, liabilities assumed, and any non-controlling interest in the acquiree – Measure FV of consideration transferred – Recognize and measure goodwill or a gain from bargain purchase Consolidation process – Add up the financial statements of the parent and subsidiaries – Make adjustments for: • Business combination valuation entries – required to adjust the carrying amounts of the subsidiary’s identifiable assets and liabilities to fair value and recognize goodwill • Pre-acquisitions entries – required to eliminate the carrying amount of the parent’s investment in each subsidiary against the pre-acquisition equity of that subsidiary • Intragroup transactions – eliminate transactions between entities within the group subsequent to acquisition date
Seminar 1 - Wholly owned subsidiaries & Intragroup transactions Slide 3
•
Problem 22.4:
•
Consolidation Worksheet, Unrecognized Intangibles and Liabilities
Lyngen Ltd gained control of Rila Ltd by acquiring all its shares on 1 July 2010. The equity that date was: Share capital $100 000
Retained earnings $ 35 000
•
At 1 July 2010, all the identifiable assets and liabilities of Rila Ltd were recorded at fair value CA FV except for: $
Inventory Land Plant (cost $120 000) 18 000 120 000 95 000 22 000 130 000 98 000
• • •
• • • • •
The inventory was all sold by 30 June 2011. The plant had a further 5-year life but was sold on 1 January 2013 for $50 000. The land was sold in March 2011 for $150 000. BCVR amounts of sold or fully
Wholly owned subsidiaries & Intragroup transactions
Seminar 1 - Réka Felleg
School of Business and Economics
Sharing Success
Agenda
• • • •
Key steps Problem 22.4 Break (?) Problem 23.3
Seminar 1 - Wholly owned subsidiaries & Intragroup transactions
Slide 2
Key steps
• Acquisition analysis – Identify an/the acquirer – Determine the acquisition date – Recognize and measure FV of identifiable assets acquired, liabilities assumed, and any non-controlling interest in the acquiree – Measure FV of consideration transferred – Recognize and measure goodwill or a gain from bargain purchase Consolidation process – Add up the financial statements of the parent and subsidiaries – Make adjustments for: • Business combination valuation entries – required to adjust the carrying amounts of the subsidiary’s identifiable assets and liabilities to fair value and recognize goodwill • Pre-acquisitions entries – required to eliminate the carrying amount of the parent’s investment in each subsidiary against the pre-acquisition equity of that subsidiary • Intragroup transactions – eliminate transactions between entities within the group subsequent to acquisition date
Seminar 1 - Wholly owned subsidiaries & Intragroup transactions Slide 3
•
Problem 22.4:
•
Consolidation Worksheet, Unrecognized Intangibles and Liabilities
Lyngen Ltd gained control of Rila Ltd by acquiring all its shares on 1 July 2010. The equity that date was: Share capital $100 000
Retained earnings $ 35 000
•
At 1 July 2010, all the identifiable assets and liabilities of Rila Ltd were recorded at fair value CA FV except for: $
Inventory Land Plant (cost $120 000) 18 000 120 000 95 000 22 000 130 000 98 000
• • •
• • • • •
The inventory was all sold by 30 June 2011. The plant had a further 5-year life but was sold on 1 January 2013 for $50 000. The land was sold in March 2011 for $150 000. BCVR amounts of sold or fully