Summary
Summary Group Statements Volume 1 Chapter 3
- Course
- Accounting 200
- Institution
- University Of Johannesburg (UJ)
Accounting for Groups at an entry level
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Chapter 3 Consolidation atAcquisition Date
Fundamental Procedures
Eliminate common or mirror items
Combine or consolidate remaining items
Pro forma journals only for consolidation purposes
Elimination of Common Items
© Eliminate investment in subsidiary against equity of sub including RE
Dr RE (s)
Dr Share Cap(s)
Cr Investment in sub(p)
Proof of purchase diff
Consideration – Equity = Gain/Goodwill/FV
Interest acquired at more than fair value of entity
Amounts which exceed fair value known as goodwill
Components of goodwill:
Fair value of going concern element of business stemming from net asset
synergies of the business
Fair value of synergies which will be achieved by the business combination
Cannot directly measure goodwill thus it is residual between FV and
consideration
Goodwill increases the equity of sub
Accounting Treatment of Goodwill
o Measured as the excess of consideration versus FV
o Must be tested for impairment each year
Acquisition at bargain
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