Acquisition during the financial period-group accounts, Financial Accounting

Assignment Help:

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.


Related Discussions:- Acquisition during the financial period-group accounts

Capital expenditure as a percentage of total asset, Analyze one completed M...

Analyze one completed M&A transaction from recent times There are two main requirements (1) an analysis of the strategic and economic rationale behind the merger, and (2) an analy

The brownstone corporation''s bonds , a) What will be the value of every of...

a) What will be the value of every of these bonds when the going rate of interest is 12%? Suppose that there is only one more interest payment to be made on Bond S. Round your answ

Consolidated statement of comprehensive income, Answer to Question Six ...

Answer to Question Six   Summarised consolidated statement of comprehensive income for the A group for the year ended 30 September 2010 All workings

Assignment, Can you do the attacched quections by Monday?

Can you do the attacched quections by Monday?

Nikki., Trying to calculate earnings per share. Is net income the same as ...

Trying to calculate earnings per share. Is net income the same as earnings before interest and taxes?

Explain working of fca, Q. How does FCA diverse from what cities already do...

Q. How does FCA diverse from what cities already do? Numerous cities at present employ budget-based, or cash-flow, accounting-they report their present costs and figure their e

Realisation of assets-liquidation of companies, Realisation of assets 1...

Realisation of assets 1. Divisible property : The ownership of the company's property does not vest in the liquidator (unless the court makes a vesting order: s.240); but

Characteristics of a will-executorship laws and accounts, Characteristics o...

Characteristics of a will 1) Dispositionary:  A will disposes the deceased’s property. 2) Formality:   For a will to be valid, it  must be written and signed by the d

Reserve requirement , 2(i). If all depositors tried to convert their deposi...

2(i). If all depositors tried to convert their deposits into cash at once, they would find that there are not sufficient reserves in the system to permit all of them to do this at

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd