中国工商银行ACCA培训班F7串讲讲义PPT课件

PAPER F7
FINAL REVIEW
GROUP ACCOUNTING
The concepts and basic principles in relation to consolidated financial statements are involved in:

IFRS 3 Business Combinations (revised in January 2008)
IAS 27 Consolidated and Separate Financial Statements
IAS 28 Investments in Associates
What you are required at Paper F7 stage
Preparation of consolidated statement of financial position under the circumstance of a single group

Calculation of goodwill, NCI and consolidated reserve
Dealing with intercompany items
Dealing with pre-acquisition dividend
Dealing with associate
inclusion in or exclusion from consolidation

What you are required at Paper F7 stage
Preparation of consolidated income statement under the circumstance of a single group

Use of a worksheet
Dealing with associate
Dealing with intercompany items
The effects of newly issued IFRS3 on exam
Under old IFRS3
Goodwill = cost of business combination
– P% (FV of NA of sub. at acq.)
Only g/w attributable to Parent is calculated.

Implicit assumption:
At the date of acquisition
MI = MI% (FV of NA of sub. at acq.)
The effects of newly issued IFRS3 on exam
Under new IFRS3 (contents marked with★ are what you are required to grasp)

★Goodwill = consideration transferred by Parent (B)
+ NCI (A)
– FV of NA of sub. at acq. (C)

In (A), (B) and (C) there is something you must keep in mind.

The effects of newly issued IFRS3 on exam
(A) At acq. ★NCI is measured
① NCI% (FV of NA of sub. at acq.)
Calculation of g/w is the same as old IFRS3.
② FV of shared held by NCI
attributable to Parent
consideration P – P% (FV of NA of sub. at acq.)
g/w =
NCI – NCI% (FV of NA of sub. at acq.)
attributable to NCI
The effects of newly issued IFRS3 on exam
(B) Consideration transferred by Parent

★Acquisition-related costs shall be expensed.
★Contingent consideration is measured as acquisition-date FV.
Whether or not part of exchange for acquiree.

The effects of newly issued IFRS3 on exam
(C) FV of NA of sub. at acq.
All identifiable intangible assets acquired in business combination shall be recognised separately from goodwill.

Thus under new IFRS3 more intangible recognised.
The effects of newly issued IFRS3 on exam
The effects of newly issued IFRS3 on exam
The effects of newly issued IFRS3 on exam
The effects of newly issued IFRS3 on exam
The effects of newly issued IFRS3 on exam
SOFP (if NCI is measured at FV at acq.)
Asset
goodwill: – unimpaired total g/w

Equity and liabilities
consolidated reserve:
P + P% (post acq. reserve of sub.) – impaired g/w to P
NCI:
NCI% (FV of FV of sub. at y/e) + unimpaired g/w to NCI
Technical issues -Tip
Technical issues – Associate
You shall apply equity method when dealing with associate in preparation of consolidated financial statements.
In the consolidated statement of financial position
“Investment in associates”
– Initial cost of investment + group’s share ofassociate’s
post-acquisition retained profit
– Group’s share of associate’s net assets at y/e + g/w
Technical issues – Associate
In the consolidated income statement
“Group’s share of the associate’s post-tax profit” should be shown as a single figure in the consolidated income statement. However, in examination the presentation showing “Group’s share of the associate’s pre-tax profit” and “group’s share of the associate’s tax” is also acceptable.
Technical issues – Inter-company items
At Paper F7 stage the inter-company items with which we would most likely be faced are inter-company sales and current account between group members.

In addition, we should also pay attention to intra-group fixed asset transfers and intra-group dividends and proposed dividends.
Technical issues – Inter-company items
You should be able to deal with inter-company sales with resulting unsold inventory both between parent and subsidiary and between parent and associate.
The key point to dealing with intra-group fixed asset transfers is to identify who recognised unrealised profit on transfer (i.e. who made the sale) and who recognised additional depreciation.
For intra-group dividends and proposed dividends you should make clear whether or not the company involved have accounted for dividends or proposed dividends in their own accounts.
Technical issues – Pre-acquisition dividend
Pre-acquisition dividends are paid after acquisition but arise from pre-acquisition accumulated profits.
The most likely circumstances under which you are required to deal with pre-acquisition dividend is when acquisition took place during the period and the acquiree paid dividend after acquisition.
The parent would treat its share of the post-acquisition dividend as realised in its own accounts; its share of the pre-acquisition dividend would be treated as unrealised and credited against the consideration paid for the subsidiary.