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Fair value adjustmentIFRS 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)
The Rohr Company's old equipment for making subassemblies is worn out. The company is considering two alternatives: a) Completely replacing the old equipment with new equipment
Swap - Financial contract in which 2 parties agree to exchange net streams of payments over a specified period. Payments are normally determined by applying different indices (for
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State the Accounting as an information system We know that accounting can be seen as provision of a service to 'clients'. Another way of viewing accounting is as a part of busi
Troubled Debt Restructuring - Agreement between CREDITOR and DEBTOR which amends the terms of a DEBT which has little chance of being paid in accordance with its contractual terms.
liabilities and its types
Q. What is Contractor Ledger? Accounts relating to contractors should be kept as personal accounts in contractor's ledger and a separate folio should be opened in the Contracto
APPORTIONMENT (a) T he purpose of the apportionment rules The purpose of the various rules of apportionment is to provide a fair and reasonable basis for dividing certain
How do I figure fair value of assets..2 year estimated useful life and indefinite life recognized by purchased company
Illustrations of Income statement Profit/Loss on disposal of non-current assets Material write down or reversal of write down on assets e.g. PPE inventory and debtors.
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