27 Questions
What is the purpose of the non-controlling interest (NCI) working in consolidation?
To account for cases where the parent entity owns less than 100% of the subsidiary
Which component is included in the group retained earnings calculation?
Parent's share of subsidiary's post-acquisition retained earnings
In the consolidated statement of financial position, what do 'other assets' include?
Values from both P and S books along with €600 fair value adjustment
What percentage of share capital did P acquire in S on the 1st of January 2017?
80%
What approach does the group use to measure goodwill?
Fair value approach
What was the fair value of the non-controlling interest at the date of acquisition?
€2,000
What was the total assets of company S as at 31st December 2017?
€26,000
What was the markup percentage on goods sold by P to S for €1,800?
50%
How much of the goods sold by P to S remained in inventory as at 31st December 2017?
One-third
What is the net movement shown in the post-acquisition column?
€2,350
What amount was recognized as an additional depreciation charge for the year passed since the date of acquisition?
€150
How much was the investment by the parent entity before considering the non-controlling interest (NCI) value?
€8,600
What method was adopted for calculating the non-controlling interest (NCI) value?
Proportion of Net Assets Method
What is the 'goodwill on acquisition' balance after deducting the fair value of the subsidiary's net assets at the date of acquisition?
€1,120
What is the percentage ownership of the non-controlling interest (NCI) in S's net assets at acquisition?
20%
What happens when the present value of an obligation grows over time?
The liability is debited and finance costs are credited.
How is contingent consideration treated in the calculation of goodwill?
It is measured at fair value and included in the overall price for calculating goodwill.
How is the fair value of contingent consideration computed?
By applying probability weighting to reflect uncertainty.
What effect does the unwinding of discount have on deferred payments?
Increases the deferred payment liability.
How are changes to accounting estimates for contingent consideration accounted for?
In accordance with IAS-8.
How does the growth in the carrying amount of deferred payment liability impact goodwill recognized upon acquisition?
It has no impact on goodwill recognized upon acquisition.
How are distributions received from an investee treated in the financial statements?
They reduce the carrying amount of the investment.
When does the equity method apply in accounting for investments?
When preparing consolidated financial statements.
How is an 'associate' defined in accounting standards?
An entity over which the investor has significant influence.
What happens to the use of the equity method if an investor ceases to have significant influence over an associate?
The equity method should be discontinued.
Where are investments in associates reported in consolidated financial statements?
Under the equity method
How is the carrying amount of an investment in an associate adjusted under the equity method?
Increased or decreased to recognize the investor's share of profit or loss.
Learn about non-controlling interest (NCI) and group retained earnings in the context of consolidated financial statements. Understand how NCI is applicable when the parent entity owns less than 100% of the subsidiary and how group retained earnings are calculated with additional gains or losses.
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