Fair value adjustment-group accounts, Financial Accounting

Fair value adjustment

IFRS 3 requires that goodwill on consolidation should be based on the fair values of the net assets of the subsidiary company on the date of acquisition.

This means that the subsidiary company should revalue its assets on the date of acquisition.But unfortunately no revaluation may have been done.  For the purpose of consolidation, it is important to determine what should have been the revaluation gain or loss if an asset is revalued. In most cases we revalue non current assets such as Property, plan nd equipment, intangible assets and long term investments. If there is a revaluation gain on any of the assets then the following entry will be made:

a) To record the revaluation gain

DR.  Group PPE/intangible assets/Longterm investments (with the full revaluation gain)
       CR.  Cost of control (with holding company share of revaluation gain)
       CR.   M.I (with M.I’s share of the revaluation gain)


For assets that are meant to be depreciated or amortized, (PPE and Intangibles), the total depreciation or amortization that should be charged to date should be estimated and provided for .

b) Compute the additional depreciation that should have been provided to date had the subsidiaries assets been revalued and record the amount as follows;

DR.   Group retained profits (with holding company share of additional depreciation)
DR.    M.I (with M.I’s share of additional depreciation)
         CR. Group PPE/Intangible assets (with the full additional depreciation)

Posted Date: 12/12/2012 3:06:08 AM | Location : United States







Related Discussions:- Fair value adjustment-group accounts, Assignment Help, Ask Question on Fair value adjustment-group accounts, Get Answer, Expert's Help, Fair value adjustment-group accounts Discussions

Write discussion on Fair value adjustment-group accounts
Your posts are moderated
Related Questions
1. Jim buys only milk and biscuits.    (a) In 2004, Jim earns $100, milk costs $2, biscuits cost $4 per dozen. Draw Jim's budget constraint  (b) Now suppose that all prices i

The construction manager for Acme, Inc. must decide whether to build single-family homes, apartments, or condominiums. She estimates annual profits will vary with the economy, as f

Answer both parts of this task. Part (i) is worth a maximum of 5 marks and Part (ii) is worth a maximum of 10 marks. (i) List the elements of the tort of negligence. (ii) Enr

Question: A proprietary life company issues only non-profit guaranteed growth bonds. The company invests only in equities with an expected return of 10% p.a, the risk free rate

Looking for Income Statement and Balance Sheet for the Better USA, Inc. company for 2010 and 2011 Facts: Sales 11,573 (2010) and 12,936 (2011) - Depreciation 1,661 and 1,736 - Cost

what are five modern techniques of accounting

Application of discharge Application may be made at any time after adjudication, but cannot be heard until the conclusion of the public examination. Notice of the hearing must

Ask qCamp Corp had the following balances in its stockholders'''' equity at jan 1: Common stock, $2, par value, 450,000 shares issued $900,000 Additional pd in capial 1,200,000 Ret

What is the function of bill receivable? What is the meaning of bill receivable?

Litigation Support/Dispute Resolution - A service that CPAs every so often provide to attorneys -for example expert testimony about the value of a business or other asset, for