Summary
Summary IAS 27 & IFRS 10
- Course
- Financial Accounting 379
- Institution
- Stellenbosch University (SUN)
Summary of IAS 27 & IFRS 10 for third year BAcc course
[Show more]
Content preview
IFRS 10: CONSOLIDATED FINANCIAL STATEMENTS:IAS 27: SEPARATE FINANCIAL STATEMENTS:
IFRS 12: DISCLOSURE OF INTERESTS IN OTHER ENTITIES:
Group Statements Vol 1: Chap 1, 3-6
OBJECTIVES (IFRS 10.01; IAS 27.01; IFRS 12.01)
SCOPE (IFRS 10.04; IAS 27.02; IFRS 12.05)
IFRS 3 (Business combination) on Acq. Date. (When holding company acquires the subsidiary)
IAS 27 (Separate financial statement): H and S (After the Acq): Holding company deals with investment in separate
books.
IFRS 10 (Consolidated financial statements): combination (After the Acq.)
IFRS 12 (Disclosure)
DEFINITIONS (IAS 27.04; IFRS 10.07 & Appendix A)
− Control: FA 379 presumes that control exists if own >50% of voting rights. Not necessary to prove control.
− Potential voting rights (IFRS 10 B47) → E.g. option of conversion of debt instruments (debentures) into
ordinary shares – possibility of control if the right is exercised
− Substantive rights (B22 & B24)
EXCEPTIONS regarding presentation of consolidated statements (IFRS 10.04(a))
CONSOLIDATION PROCEDURES: B86
− Combine fin statements line by line as if it’s a single economic entity
− Eliminate Investment in Parent company and Equity in Subsidiary
− Create Goodwill (IFRS 3) and NCI (Non-controlling interest) separate
− Intra-group transactions/balances eliminated in full [E.g. loans, inventory sales, etc.]
Consolidate from “acquisition date” (IFRS3) until date when control ceases (.20) [<= 50%]
SAME REPORTING DATE (B92-93)
UNIFORM ACCOUNTING POLICIES (.19 and B87)
NCI: (IFRS 10.22 - .24; B94 – B96)
CLASS EXAMPLE 1: IMPAIRMENT OF GOODWILL
ANALYSIS OF SHAREHOLDERS' INTEREST OF S LTD.
H LTD. (80%) 20%
TOTAL AT SINCE NCI
AT
Share capital 10 000 8 000 2 000
Retained earnings 35 000 28 000 7 000
45 000 36 000 9 000
Cost of acquisition 40 000 INVESTMENT
Goodwill 4 000
SINCE
To beginning of current year
Retained earnings 100 000 80 000 20 000
Current year
Profit for the year 7 500 6 000 1 500
152 500 86 000 30 500
IMPARIMENT of goodwill
To beginning of current year (1 600)
Recoverable amount in SFP 2 400
Current year (200)
Recoverable amount in SFP 2 200
Main elimination journal:
DR Share capital (SCE) 10 000
DR Retained earnings (SCE) 35 000
DR Goodwill (SFP) 4 000
CR Investment (SFP) 40 000
CR NCI (SFP) 9 000
DT R/E (SFP) 20 000
CR NCI (SFP) 20 000
1
, DT NCI (P/L) 1 500
CR NCI (P/L) 1 500
Regarding the "since" period:
DR Retained earnings (SCE) 1600
CR Goodwill (SFP) 1600
Regarding the current year:
DR Impairment loss (P/L) 200
CR Goodwill (SFP) 200
Not affect NCI; Not affect analysis
CLASS EXERCISE 1
PART A
Presume H purchases shares in S on 1/1/20x9 as follow: 70% of S's shares for R800 000 (exercises control)
Statement of Financial Position on acquisition date: H S
Share capital R 500 000 R 300 000
Reserves 1 000 000 700 000
Net assets R 1 500 000 R 1 000 000
Assume S's assets and liabilities were fairly valued.
REQUIRED: Show the analysis of equity and consolidation journals on the date of acquisition.
Consolidation journals on 1/1/20x9 DR (R) CR (R)
Dr Share capital (S) (SFP) 300 000
Dr Reserves (S) (SFP) 700 000
Dr Goodwill (SFP) 100 000
Cr Investment in S (H) (SFP) 800 000
Cr NCI (SFP) 300 000
PART B
Presume S's profit for the year ended 31/12/20x9 is R200 000 and there is no other changes in the equity of S and also no changes in
the equity of H for the year.
REQUIRED
i) Prepare the additional consolidation journals (to those in Part A) on 31/12/20x9 and add the additional information to the
analysis started in part A.
ii) Prepare the abridged consolidated statement of financial position of H and S on 31/12/20x9. Use a consolidation worksheet
as illustrated below.
i) Consolidation journals on 31/12/20x9 DR CR
Dr NCI (P/L) 60 000
Cr NCI (SFP) 60 000
2
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller stelliesaccounting. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R0,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
73918 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now