Acquisition during the financial period-group accounts, Financial Accounting

Acquisition during the financial period

The holding company may acquire the subsidiary company partway through the financial period such that as at the balance sheet date, the subsidiary company has been held for a period of less than 12 months.

The consolidation procedure does not change because we are dealing with the assets and the liabilities of the two companies as at a certain date..

However, the following two points need to be considered;

a) Computation of retained profits acquisition
As the holding company has acquired the subsidiary company while trading is taking place, then it may be difficult to determine retained profits as acquisition, unless financial amounts of subsidiary company are prepared.

Therefore, to simplify the computations of retained profits on acquisition, we normally assume that the retained profits for the year of the subsidiary company accrue evenly and they can be split between the pre-acquisition and post acquisition based on the months.

Thereafter, the retained profits on acquisition are given as follows;

Retained profits on acquisition = Retained profits b/d + Re-acquisition retained profits for the year.

b) Pre-acquisition dividends

Pre-acquisition dividend is dividend paid by the subsidiary company out of pre-acquisition profit or it is the dividend that is received or receivable by the holding company from the subsidiary company that relates the period before acquisition.
   
Thus if the holding company has owned the subsidiary company for a period of less than 12 months and the holding company receives some share of dividends paid from the subsidiary company then the holding company will receive some pre-acquisition dividends.

Posted Date: 12/12/2012 4:08:37 AM | Location : United States







Related Discussions:- Acquisition during the financial period-group accounts, Assignment Help, Ask Question on Acquisition during the financial period-group accounts, Get Answer, Expert's Help, Acquisition during the financial period-group accounts Discussions

Write discussion on Acquisition during the financial period-group accounts
Your posts are moderated
Related Questions
ACCOUNTS UNDER TRUSTEE (a) Authorised investments The investments which trustees are permitted to hold may be specifically stated in the will or deed constituting the se

DISCLAIMER OF ONEROUS PROPERTY 1) Effect of disclaimer The trustee may disclaim onerous property consisting of: Land burdened with onerous covenants; Stocks and shares;

Public Oversight Board (POB) - POB is an independent oversight board, composed of public members that monitors and evaluates peer reviews conducted by SEC Practice Section (SECPS)



The financial year of Jack and Jill Ltd will end on 31 May 2008. At 1 June 2007, the company had in use equipment with a total accumulated cost of Rs 135,620 which had been depreci


The assets and liabilities of Toronto Service Inc. as of December 31, 2008, and revenue and expenses for the year ended December 31, 2008 are listed below: Accounts

Stark Company has five employees. Employees paid by the hour receive a $10 per hour pay rate for the regular 40-hour work week plus one and one-half times the hourly rate for each

The conflicting interests of users We have seen above that every user group looks at a business from a different perspective and has its own individual interests. This means th