,SUMMARY OF JOURNALS
main elimination journal
DR share capital (SCE)
DR RE-at(SCE)
DR revaluation surplus(SCE)
CR Investment (SFP)
CR NCI (SFP)
DR goodwill
DR RE-since (SCE)
CR NCI (SFP)
(only NCI portion)
DR NCI (PL)
CR NCI (SFP)
(NCI CY)
DEPRECIABLE ASSETS NON depreciable ASSETS
AT acquisition At acquisition
DR equipment (SFP) Dr Land (SFP)
CR Revaluation surplus (OCI) Cr revaluation surplus (OCI)
DR income tax expense(PL) DR income tax expense (PL)
CR deferred tax (SFP) CR deferred tax(SFP)
(CGT)
SUBSEQUENT If it was a LOSS SUBSEQUENT
DR equipment (SFP) DR deferred tax(SFP) DR Land (SFP)
CR Revaluation surplus (SCE) DR revaluation surplus Cr Revaluation surplus (SCE)
CR deferred tax(SFP) CR vehicles CR deferred tax (SFP)
DR RE-since (SCE) DR accumulated dep(SFP)
DR deferred tax(SFP) CR RE-since (SCE)
CR accumulated dep (SFP) Cr deferred tax(SFP)
(dep since acq until beg CY)
DR depreciation (PL) DR accumulated dep(SFP)
CR accumulated depreciation(SFP) CR depreciation
(over remaining useful life on acquisition)
DR deferred tax (SFP) DR income tax expense(PL)
CR income tax expense (PL) Cr deferred tax (SFP)
SOLD SOLD
DR profit on sale (PL) DR profit on sale (PL)
DR accumulated depreciation(SFP) CR land (SFP)
CR equipment(SFP)
DR deferred tax(SFP) DR deferred tax (SFP)
, CR income tax expense(PL) CR income tax expense (PL)
Years after sale years after sale
DR RE (SCE) DR RE (SCE)
CR revaluation surplus- AT (SCE) CR revaluation surplus -at (SCE)
(only with revaluation amount after tax)
contingent liability (probabilities)
DR RE-at (SCE)
DR deferred tax (SFP)
CR Provision (SFP)
(this is the PV)
provisions : NOT contractual agreement
DR Provision (SFP)
CR RE-at (SCE)
Cr Deferred tax (SFP)
(IF not deductible for tax then no deferred tax)
expense PAID
DR expense (PL)
DR deferred tax (SFP)
CR Provision (SFP)
INVENTORY
increase in value
DR inventory (SFP)
CR RE-at
CR deferred tax (SFP)
sold some inventory BEFORE CY
DR RE-since
DR deferred tax (SFP)
CR inventory
(reval amount x % sold)
CY: sold the remainder of the inventory
DR COS (PL)
CR inventory (SFP)
(reval amount x % sold )
DR deferred tax (SFP)
CR income tax expense (PL)
, DISCLOSURE
NOTES TO THE FIN STATEMENTS FOR THE GROUP
1) Interest in significant subsidiaries
- Date of acquisition
o On … X acquired Y
- What sectors the companies trade in
- The % voting rights in ordinary shares
- If the company acquires a higher % of voting rights at general meetings (disclose this)
- Why was the interest in the subsidiary acquired
- The consideration and how was it settled
o If they give you the cash value in the year AFTER acquisition you need to discount the cash value back
to acquisition date (using the PV calc on HP calculator)
- The fair values of the net identifiable assets of the subsidiary on acquisition are as follows:
o PPE + revaluation (NO tax)
o Debtors
o Inventories
o Cash
o Creditors
o =TOTAL
- The NCI on acquisition date was recognized
o This is the total of FV of net identifiable assets x % NOT voting rights in ordinary shares
- The measurement of NCI: NCI is measured at the proportionate share of net identifiable assets of the
acquiree on the acquisition date
o NCI can be measured @ FV on acquisition date ( if the question says)
- The share issuance costs of Tx were directly set off against equity (retained earnings)
- The contractual value equaled the FV of debtors on the acquisition date and it is expected that the full
debtors balance will be recoverable
o The gross contractual value and FV of debtors were …
o It is estimated that R .. will not be collected
- GW arising on acquisition is the result of expected synergies that will flow from the business combination
and will not be deductible for tax purposes
- Costs directly attributable to the acquisition was R…
- Revenue/ income of R… and profit to the amount of R… for the period
o If the business combination had occurred at the beginning of the year the revenue and profit would
be …
o But the revenue and the profit for the period of X date -> X date is …
2) GOODWILL
GROSS AMOUNT CUMULATIVE CA
IMPAIRMENT LOSSES
Opening balance
Subsidiary acquired
during period
(investment- % of net
identifiable assets )
Impairment loss
Closing balance
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