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retained profits brought forwardif we recall from the consolidated balance sheet the group-retained profits should be made up of the holding
dividendsthe dividends that appear in the consolidated statement of change in equity are for the holding company only this is because the dividends
ideal minority interestthe minority interest ideally is entitled to the profit after tax in minority interest however due to consolidation the
consolidated income statement and consolidated statement of changes in equity the consolidated income statement follows similar
illustration holding company with direct share holdingrain ltd storm ltd and thunder ltd are in the business of manufacturing tents their balance
important points for holding company with subsidiarythe following points are important1 the first approach is to determine the effective shareholding
holding company with more than one subsidiary companyunder this type of structure the holding company controls more than one company for example h
group structuresa group structure is the relationship between the holding company and its subsidiaries there are normally four main types of
pre-acquisition dividendspre-acquisition dividends may also arise in the following situations1 where the holding company acquires the subsidiary
illustration of pre-aquisitionh ltd acquired 80 of s ltd during the year ended 311204 s ltd paid an interim dividend of 40000 on 30th
illustration computation of retained profits acquisition normal 0 false false false en-us x-none x-none microsoftinternetexplorer4
acquisition during the financial periodthe holding company may acquire the subsidiary company partway through the financial period such that as at
pre-acquisition losses in subsidiary company on date of acquisitionif the subsidiary company has a loss on the date of acquisition ie a debit balance
other aspects of the consolidated balance sheetthe consolidated balance sheet may require a special approach under the following situations1
fair value adjustmentifrs 3 requires that goodwill on consolidation should be based on the fair values of the net assets of the subsidiary company on
proposed dividends by subsidiary companyif the subsidiary company has proposed some dividends appearing under current liabilities then the dividends
differences in inter company balancesi cash in transitwhere one company may have sent cash which is yet to be received by the other company as at the
inter company balancesone of the companies may appear as receivable debtor or payable creditor in the other companyrsquos books just like in
unrealized profit on property plant and equipmentwhere one company sells an item of ppe to the other company in the group then this will lead to
unrealized profit on closing inventory where one company has bought goods from another company in the group and part of these goods are included in
goodwillpreviously under ias 22 on business combinations goodwill on consolidation used to be amortized over an estimated period of years however
intra company adjustmentsin preparing the consolidated balance sheet the following items may require adjustments1 goodwill2
illustration of consolidated balance sheeth ltd owned s ltd since the date of incorporation of s ltd the balance sheets of the two companies as
steps in preparing the consolidated balance sheetstep 1prepare the 3 important accounts iecost of control to determine goodwillgroup retained
loan stock in subsidiary the holding company may also invest in the loan stock of the subsidiary company or part of the loan stock of the subsidiary