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Are dividends an expense12/16/2023 ![]() Time apportionment of the results of S in the year of acquisition.Identification of the net assets of S at the date of acquisition in order to calculate goodwill.If a subsidiary is acquired part way through the year, then thesubsidiary’s results should only be consolidated from the date ofacquisition, i.e. The consolidated income statement must include a depreciationcharge based on the fair value of the asset, included in theconsolidated SFP.Įxtra depreciation must therefore be calculated and charged to anappropriate cost category (usually in line with examiner requirements). The subsidiary's own income statement will include depreciationbased on the value the asset is held at in the subsidiary's own SFP. If a depreciating non-current asset of the subsidiary has beenrevalued as part of a fair value exercise when calculating goodwill,this will result in an adjustment to the consolidated income statement. ![]() If non-controlling interests have been valued at fair value, aportion of the impairment expense must be removed from thenon-controlling interest's share of profit. This will usually be through operating expenses, howeveralways follow instructions from the examiner. Once any impairment has been identified during the year, thecharge for the year will be passed through the consolidated incomestatement. NCI share of subsidiary's profit after tax 40% Ã- $67,000 = $26,800 P consolidated income statement for the year ended 31 December 20X9 Prepare the consolidated income statement to incorporate P and S for the year ended 31 December 20X9. On 31 December 20X9 S stillhad half of these goods in inventories at the year end. The following income statements have been produced by P and S for the year ended 31 December 20X9.ĭuring the year ended 31 December 20X9 P had sold $42,000 worth ofgoods to S. On 1 January 20X9 P acquired 60% of the ordinary shares of S. The adjustment for unrealised profit should be shown as an increaseto cost of sales (return inventory back to true cost to group andeliminate unrealised profit). If any goods sold intra-group are included in closing inventory,their value must be adjusted to the lower of cost and net realisablevalue (NRV) to the group (as in the CSFP). NCI share of subsidiary profit for the year P consolidate income statement for the year ended 31 August 20X4 Prepare the consolidated income statement for the year. P acquired 75% of the ordinary share capital of Sseveral years ago. The income statements for P and S for the year ended 31 August20X4 are shown below.
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