Fair value adjustment-group accounts, Financial Accounting

Assignment Help:

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)


Related Discussions:- Fair value adjustment-group accounts

Concepts in accounting, Mr. Inherits 30000. Decides to open a salon jj salo...

Mr. Inherits 30000. Decides to open a salon jj salon. On 1/4/2016 commits 10000 to the business Opens an a/c in the bank What will be the money under capital in his books on 1/4/10

Financial reporting, what the meaning of the economic consequences of accou...

what the meaning of the economic consequences of accounting information quality with examples?

Dissolutions situations, Dissolutions situations There are two situatio...

Dissolutions situations There are two situations that need to be considered under dissolutions. These are:- 1) Where the assets are sold at once (one single transaction) 2) As

Resolution for voluntary winding up-liquidation of companies, Resolution Fo...

Resolution For Voluntary Winding Up A company may be put into voluntary liquidation: 1) By ordinary resolution: where any period fixed for the duration of the company has ex

Franchise, gershwin coporation obtained afranchise fron sonic hedgeehog inc...

gershwin coporation obtained afranchise fron sonic hedgeehog inc .for a cash payment of $ 120000 on april 1,2010 . the franchise grants gershwin the right to sell certain product a

Estimate comparative advantage, The only two countries in the world, Alpha ...

The only two countries in the world, Alpha and Omega, face the following production possibilities frontiers (all units measured in tons). Alpha's Production PossibilitiesFrontier

Describe about capital stock, Q. Describe about Capital Stock? Capital ...

Q. Describe about Capital Stock? Capital Stock - Ownership shares of a CORPORATION authorized by its ARTICLES OFINCORPORATION. Money value assigned to a corporation's issued sh

Use net present value and payback period method, Given the following cash f...

Given the following cash flows for projects A and B:   Year      Project A   Project B     0       -100,000     -150,000   (Project Cost)     1         25,000

Prepare financial statements for non reporting entities, THDS Brewery is pr...

THDS Brewery is priavet limited company(plc) established according to the Ethiopian commercial code.it is engaged in brewery business

Play money assignment, This assignment requires you to pretend you have $10...

This assignment requires you to pretend you have $10,000 to invest for 4 weeks.  You are to "invest" this money in stocks or mutual funds and to track your investments on a weekly

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