Consolidated Financial Statements: NCI & Group Retained Earnings
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Questions and Answers

What is the purpose of the non-controlling interest (NCI) working in consolidation?

  • To evaluate the goodwill generated through the acquisition
  • To calculate the parent entity's ownership percentage
  • To account for cases where the parent entity owns less than 100% of the subsidiary (correct)
  • To determine the ownership percentage of subsidiary being consolidated

    • Which component is included in the group retained earnings calculation?

  • Positive goodwill from the transaction
  • Parent's share of subsidiary's post-acquisition retained earnings (correct)
  • Parent's share of subsidiary's pre-acquisition retained earnings
  • Negative goodwill from the transaction

    • In the consolidated statement of financial position, what do 'other assets' include?

  • Values from the parent's books only
  • Values from P books and a €1,100 gain on bargain purchase
  • Only values from the subsidiary's books
  • Values from both P and S books along with €600 fair value adjustment (correct)

    • What percentage of share capital did P acquire in S on the 1st of January 2017?

    <p>80%</p> Signup and view all the answers

    What approach does the group use to measure goodwill?

    <p>Fair value approach</p> Signup and view all the answers

    What was the fair value of the non-controlling interest at the date of acquisition?

    <p>€2,000</p> Signup and view all the answers

    What was the total assets of company S as at 31st December 2017?

    <p>€26,000</p> Signup and view all the answers

    What was the markup percentage on goods sold by P to S for €1,800?

    <p>50%</p> Signup and view all the answers

    How much of the goods sold by P to S remained in inventory as at 31st December 2017?

    <p>One-third</p> Signup and view all the answers

    What is the net movement shown in the post-acquisition column?

    <p>€2,350</p> Signup and view all the answers

    What amount was recognized as an additional depreciation charge for the year passed since the date of acquisition?

    <p>€150</p> Signup and view all the answers

    How much was the investment by the parent entity before considering the non-controlling interest (NCI) value?

    <p>€8,600</p> Signup and view all the answers

    What method was adopted for calculating the non-controlling interest (NCI) value?

    <p>Proportion of Net Assets Method</p> Signup and view all the answers

    What is the 'goodwill on acquisition' balance after deducting the fair value of the subsidiary's net assets at the date of acquisition?

    <p>€1,120</p> Signup and view all the answers

    What is the percentage ownership of the non-controlling interest (NCI) in S's net assets at acquisition?

    <p>20%</p> Signup and view all the answers

    What happens when the present value of an obligation grows over time?

    <p>The liability is debited and finance costs are credited.</p> Signup and view all the answers

    How is contingent consideration treated in the calculation of goodwill?

    <p>It is measured at fair value and included in the overall price for calculating goodwill.</p> Signup and view all the answers

    How is the fair value of contingent consideration computed?

    <p>By applying probability weighting to reflect uncertainty.</p> Signup and view all the answers

    What effect does the unwinding of discount have on deferred payments?

    <p>Increases the deferred payment liability.</p> Signup and view all the answers

    How are changes to accounting estimates for contingent consideration accounted for?

    <p>In accordance with IAS-8.</p> Signup and view all the answers

    How does the growth in the carrying amount of deferred payment liability impact goodwill recognized upon acquisition?

    <p>It has no impact on goodwill recognized upon acquisition.</p> Signup and view all the answers

    How are distributions received from an investee treated in the financial statements?

    <p>They reduce the carrying amount of the investment.</p> Signup and view all the answers

    When does the equity method apply in accounting for investments?

    <p>When preparing consolidated financial statements.</p> Signup and view all the answers

    How is an 'associate' defined in accounting standards?

    <p>An entity over which the investor has significant influence.</p> Signup and view all the answers

    What happens to the use of the equity method if an investor ceases to have significant influence over an associate?

    <p>The equity method should be discontinued.</p> Signup and view all the answers

    Where are investments in associates reported in consolidated financial statements?

    <p>Under the equity method</p> Signup and view all the answers

    How is the carrying amount of an investment in an associate adjusted under the equity method?

    <p>Increased or decreased to recognize the investor's share of profit or loss.</p> Signup and view all the answers

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