MODULE 9

Group Accounting - I
 IFRS 10 - Presentation of consolidated financial statements
What you will
IAS 27 – Accounting for investments
learn

IFRS 3 - Business combinations

IFRS 3 – Goodwill
 IFRS 10
Consolidated Financial Statements
 IFRS 10

"An investor controls an investee if it has ALL the following:

• Power over the investee;

• Exposure, or rights, to variable returns from its involvement with the investee; and

• The ability to use its power over the investee to affect the amount of the investor's returns.”

Non-controlling interests (NCI)

• Non-controlling interests are the "equity in a subsidiary not attributable, directly or indirectly, to a

parent."
 Principles of Consolidations

Parent prepares consolidated financial statements as per IFRS

Start consolidate from date of control and cease when control is lost

Partial disposal

Exemption

Reporting date differences should not exceed 3 months

Example 9.1: Consolidation B/S
Example 9.2: Consolidated I/ST
 Example 9.3: Unrealized gains

Assume that the last example is changed so that half of the $20m goods sold by P Co to S Co have not been

sold on to a third party by the year end. P Co charged 25% on cost when setting its selling prices.
 Example 9.4:

…..
 IAS 27
Separate Financial Statements
IAS 27
Investor F/S

Ordinary Investment Associates Subsidiary

Acquisition method
IFRS 9 Equity Accounting
at cost
 IFRS 3
Business combinations
 Acquisition method

Identification of acquirer

Determine acquisition date

Combine assets and liabilities

Recognize and measure NCI

Recognize and measure goodwill

• Positive goodwill
• Negative goodwill
Goodwill

Goodwill

Proportion of
Fair value
assets
method
method

Partial
Full goodwill
goodwill
 Example 9.5

Missile Co acquired a subsidiary on 1 January 20X3 for $2,145 million.

The fair value of the net assets of the subsidiary acquired were $2,170 million.

Missile Co acquired 70% of the shares of the subsidiary.

The non-controlling interest was fair valued at $683 million.

• Calculate goodwill based on the partial goodwill method under IFRS 3

• calculate goodwill based on the full goodwill method under IFRS 3