N. Title Location: List of Examples Consolidation + Group Accounts

www.IFRSbox.
com List of Examples Consolidation + Group accounts
N. Title Location
Example 1 Contron or not? Handouts
Example 2 Consolidated StofFP - basics Excel
Example 3 Consolidated StofFP - intragroup transactions Excel
Example 4 Consolidated StofFP - non-controlling interest by proportionate share method Excel
Example 5 Consolidated StofFP - goodwill + pre-acquisition equity Excel
Example 6 Consolidated StofFP - non-controlling interest by fair value method + impairment of goodwiExcel
Example 7 Consolidated StofFP - negative goodwill Excel
Example 8 Consolidated StofFP - consideration transferred Excel
Example 9 Consolidated StofFP - intragroup transactions (AUP) Excel
Example 10 Consolidated StofFP - intragroup transactions (AUP) with non-controlling interest Excel
Example 11 Consolidated StofFP - Fair value adjustments Excel
Example 12 Consolidated StofFP - complex case study (the exam way) Excel
Example 13 Consolidated StofP/L and OCI - basics Excel
Example 14 Consolidated StofP/L and OCI - mid-year acquisition Excel
Example 15 Consolidated StofP/L and OCI - intra-group trading, fair value adjustment Excel
Example 16 Investments in associates - basics Excel
Example 17 Investments in associates - FV adjustments, intra-group sales Excel
www.IFRSbox.com Example 2: Basic consolidated statement of financial position Consolidation + Group accounts
Mommy Corp has owned 100% shares of Baby Ltd since Baby's
incorporation.
Below there are statements of financial positions of both Mommy and
Baby at 31 December 20X4.
Prepare consolidated statement of financial position of Mommy Group as
at 31 December 20X4.
Mommy Group
Statement of financial position as at 31 December 20X4 STEP 1 STEP 2 STEP 3 Consolidated
Mommy Corp. Baby Ltd. Combine Eliminate Intragroup transactions St of FP
ASSETS
Non-current assets
Property, plant and equipment 120,000 90,000 210,000 210,000
Investment in Baby Ltd. (80 000 shares at 1 CU) 80,000 0 80,000 -80,000 0
Deferred tax asset 4,000 4,000 4,000
204,000 90,000 214,000
Current assets
Inventories 55,000 34,000 89,000 89,000
Trade and other receivables 0
Baby Ltd 8,000 8,000 -8,000 0
Other receivables 30,000 18,000 48,000 48,000
Cash and cash equivalents 10,000 5,000 15,000 15,000
103,000 57,000 152,000
TOTAL ASSETS 307,000 147,000 366,000
EQUITY & LIABILITIES

Equity
200 000 shares (1 CU each) -200,000 -200,000 -200,000
80 000 shares (1 CU each) -80,000 -80,000 80,000 0
Retained earnings -62,000 -45,000 -107,000 -107,000
-262,000 -125,000 -307,000
Liabilities
Non-current liabilities
Deferred tax liability -2,000 -2,000 -2,000
Current liabilities 0
Trade payables 0 0
Mommy Corp. -8,000 -8,000 8,000 0
Other payables -35,000 -12,000 -47,000 -47,000
Loans repayable within 12 months -10,000 -10,000 -10,000
-45,000 -22,000 -59,000
TOTAL EQUITY & LIABILITIES -307,000 -147,000 0 -366,000
CHECK 0 0 0 0 0 0
www.IFRSbox.com Example 3: Intragroup transactions Consolidation + Group accounts
Mommy Corp has owned 100% shares of Baby Ltd since Baby's
incorporation.
Below there are statements of financial positions of both Mommy and
Baby at 31 December 20X4.
Prepare consolidated statement of financial position of Mommy Group as
at 31 December 20X4.
Mommy Group
ASSETS
Non-current assets
204,000 90,000 294,000 214,000
Current assets 0
Inventories 55,000 34,000 89,000 89,000
Trade and other receivables 0 0
Baby Ltd becomes Goods in transit 8,000 8,000 -6,000 2,000
103,000 57,000 160,000 154,000
TOTAL ASSETS 307,000 147,000 454,000 368,000

Equity
200 000 shares (1 CU each) -200,000 -200,000 -200,000
80 000 shares (1 CU each) -80,000 -80,000 80,000 0
Retained earnings -62,000 -45,000 -107,000 -107,000
-262,000 -125,000 -387,000 -307,000
Liabilities 0
Non-current liabilities 0
Trade payables 0 0
Mommy Corp. -6,000 -6,000 6,000 0
Other payables -35,000 -14,000 -49,000 -49,000
-45,000 -22,000 -67,000 -61,000
TOTAL EQUITY & LIABILITIES -307,000 -147,000 -454,000 -368,000
CHECK 0 0 0 0 0 0
Example 4: Non-controlling interest
www.IFRSbox.com Consolidation/Group Accounts
(Proportionate share on net assets)
Mommy Corp has owned 80% shares of Baby Ltd since Baby's incorporation.
Below there are statements of financial positions of both Mommy and Baby at 31
December 20X4.
Prepare consolidated statement of financial position of Mommy Group as at 31
December 20X4.
Note: measure NCI at its proportionate share of Baby's net assets (Method I).
Mommy Group
ASSETS
Non-current assets
188,000 90,000 278,000 214,000
Current assets 0
Inventories 55,000 34,000 89,000 89,000
Baby Ltd 8,000 8,000 -8,000 0
119,000 57,000 176,000 168,000
TOTAL ASSETS 307,000 147,000 454,000 382,000

Equity
Equity attributable to owners of the parent
200 000 shares (1 CU each) -200,000 -200,000 -200,000
80 000 shares (1 CU each) -80,000 -80,000 80,000 0
See [2] below to verify.
Retained earnings -62,000 -45,000 -107,000 9,000 -98,000
See [1] below
Non-controlling interest -25,000 -25,000
-262,000 -125,000 -387,000 -323,000
Liabilities 0
Non-current liabilities 0
Trade payables 0 0
Mommy Corp. -8,000 -8,000 8,000 0
Other payables -35,000 -12,000 -47,000 -47,000
-45,000 -22,000 -67,000 -59,000
CHECK 0 0 0 0 0 0
Workings:
[1]
Non-controlling interest:
Net assets of Baby (=equity): -125,000
Share of NCI (=100%-80%) 20%
Non-controlling interest: -25,000
[2]
Consolidated retained earnings:
Retained earnings of Mommy: -62,000
Retained earnings of Baby attributable to Mommy: -36,000
(80%*Baby's retained earnings of 45 000 CU)
(Proportionate share on net assets)
Consolidated retained earnings: -98,000

www.IFRSbox.com Example 5: Goodwill Consolidation/Group Accounts
Mommy Corp acquired 100% share in Baby Plc. on 30 June 20X4. Previous shareholders of Baby agreed to accept
15 ordinary shares in Mommy in exchange for 20 ordinary shares in Baby, or the cash payment of CU 100 000
(=fair value). Mommy decided to issue share capital rather than pay cash. You are required to:
1) Show how this transaction is recognized in Mommy's individual or separate financial statements.
2) Prepare consolidated statement of financial position of Mommy Group as at 30 June 20X4.
Note: Mommy's statement of financial position below does NOT include the effect of Baby's acquisition.
Mommy Group
Statement of financial position as at 30 June 20X4 Adjust Mommy's Mommy Corp. STEP 1 STEP 2 STEP 3 Consolidated
statement of FP (adjusted)
Mommy Corp. Baby Plc. Combine Eliminate Intragroup transactions St of FP
ASSETS
Non-current assets
Property, plant and equipment 120,000 90,000 120,000 210,000 210,000
See [2] below
Goodwill acquired in a business combination 0 8,000 8,000
Investment in Baby Ltd. (80 000 1CU-shares) 0 100,000 100,000 100,000 -100,000 0
Deferred tax asset 4,000 4,000 4,000 4,000
124,000 90,000 224,000 314,000 222,000
Current assets
Inventories 85,000 24,000 85,000 109,000 109,000
Trade and other receivables 0 0 0
Baby Ltd 8,000 8,000 8,000 -8,000 0
Other receivables 45,000 10,000 45,000 55,000 55,000
Cash and cash equivalents 45,000 5,000 45,000 50,000 50,000
183,000 39,000 183,000 222,000 214,000
TOTAL ASSETS 307,000 129,000 407,000 536,000 436,000

Equity See [1] below
260 000 shares (1 CU each) -200,000 -60,000 -260,000 -260,000 -260,000
80 000 shares (1 CU each) -80,000 0 -80,000 80,000 0
Share premium -40,000 -40,000 -40,000 -40,000
Retained earnings - pre-acquitision -62,000 -12,000 -62,000 -74,000 12,000 -62,000
See [1] below
Non-controlling interest 0 0
-262,000 -92,000 -362,000 -454,000 -362,000
Liabilities
Deferred tax liability -2,000 0 -2,000 -2,000
Trade payables 0
Mommy Corp. -8,000 0 -8,000 8,000 0
Other payables -35,000 -12,000 -35,000 -47,000 -47,000
Loans repayable within 12 months -10,000 -15,000 -10,000 -25,000 -25,000
-45,000 -37,000 -45,000 -82,000 -74,000
TOTAL EQUITY & LIABILITIES -307,000 -129,000 0 -407,000 -536,000 -436,000
CHECK 0 0 0 0 0 0 0
Workings:
[1]
New shares issued by Mommy:
Shares acquired in Baby: 80,000
Shares issued by Mommy (15 M for 20 B) 60,000
FV of Baby's share capital (= Mommy's cost) 100,000
[2]
Goodwill:
FV of consideration: 100,000
www.IFRSbox.com Example 5: Goodwill Consolidation/Group Accounts
Baby's share capital: -80,000

Baby's retained earnings: -12,000
Goodwill acquired: 8,000
(Fair value)
Mommy Corp acquired 80% share in Baby Plc. on 30 June 20X4 when Baby's retained earnings Cont.: Mommy Corp. performs the annual impairment review of goodwill. Baby's recoverable amount was
amounted to CU 12 000. The market price of Baby's shares just before the acquisition date was set to CU 100 000. What should Mommy Group recognize in its consolidated financial statements with
CU 1.2 per share. Mommy decided to value non-controlling interest at fair value rather than at respect of the impairment of goodwill?
proportionate share on Baby's net assets. Note: Assume that the whole Baby is a CGU and goodwill was fully allocated to Baby. For simplicity, all
Prepare consolidated statement of financial position of Mommy Group as at 31 December 20X4. Baby's net assets are included in CGU.
Note: Mommy's and Baby's separate statements of financial position at 31 December 20X4 are
below .
STEP 2 STEP 2 Mommy Group Impairment Impairment

Statement of financial position as at 31 December 20X4 STEP 1 Eliminate Eliminate STEP 3 Consolidated of goodwill of goodwill
Mommy Corp. Baby Plc. Combine Method I Method II Intragroup transactions St of FP Method I Method II
ASSETS
Non-current assets
Goodwill acquired in a business combination 6,400 7,200 7,200 -4,000 -4,200
Investment in Baby Plc. (64 000 1CU-shares) 80,000 0 80,000 -80,000 -80,000 0
204,000 90,000 294,000 221,200
Current assets
Inventories 55,000 24,000 79,000 79,000
Baby Ltd 8,000 8,000 -8,000 0
126,000 44,000 170,000 162,000
TOTAL ASSETS 330,000 134,000 464,000 383,200

Equity
200 000 shares (1 CU each) -200,000 -200,000 -200,000
80 000 shares (1 CU each) -80,000 -80,000 80,000 80,000 0
Retained earnings -90,000 -17,000 -107,000 13,000 13,000 -94,000 4,000 3,360
Non-controlling interest -19,400 -20,200 -20,200 840
-290,000 -97,000 -387,000 -314,200
Liabilities
Trade payables 0
Mommy Corp. -8,000 -8,000 8,000 0
Other payables -30,000 -12,000 -42,000 -42,000
Loans repayable within 12 months -10,000 -15,000 -25,000 -25,000
-40,000 -37,000 -77,000 -69,000
CHECK 0 0 0 0 0 0 0 0 0
Workings:
[1] We are not using this column now. It is here just to
Goodwill (Method I): illustrate the difference. Please note that final statement
FV of consideration: 80,000 of FP takes only Method II numbers.
Non-controlling interest (80 000+12 000)*20% 18,400
Less Baby's net assets at acquisition: -92,000 Note: here, we take pre-acquisition earnings only
[2]
Elimination of retained earnings:
Baby's pre-acquisition retained earnings: -12,000 Note: Eliminate pre-acquisition reserves in full
(Fair value)
Baby's post-acquisition retained earnings: -5,000

NCI's share of 20%: -1,000 Note: Eliminate only NCI's share on post-acquisition reserves
Retained earnings to eliminate: -13,000 Note: please revise the formula here.
[3]
Non-controlling interest (by method I - proportionate share):
Non-controlling interest at acquisition: -18,400
NCI's share on post-acquisition reserves: -1,000
[4]
Goodwill (Method II):
FV of NCI at acquisition:
Market price of Baby's share before acquisition: 1.20 CU per share
Amount of shares belonging to NCI: 16,000 Note: Look to Baby's statement of FP, caption "share capital" (total amount of shares = 80 000)
FV of NCI at acquisition: 19,200
Less Baby's net assets at acquisition -92,000
[5]
Non-controlling interest (by method II - fair value):
Non-controlling interest at acquisition: 19,200
NCI's share on post-acquisition reserves: 1,000
Non-controlling interest: 20,200
[6]
Post-acquisition retained earnings of Baby attributable
-4,000
to Mommy:
(80%*Baby's retained earnings of 5 000 CU)
[7]
Impairment of goodwill (method I):
Carrying amount of Baby's net assets: 97,000
Add allocated goodwill: 6,400
Gross-up goodwill (6 400/80 * 100) 8,000
Carrying amount of CGU - Baby: 105,000 Note: Net assets plus grossed-up goodwill.
Recoverable amount: 100,000
Difference - impairment loss: 5,000
Reduce it to 80% - impairment loss to recognize: 4,000 Do not split the entry.
Carrying amount of goodwill after impairment loss: 2,400
[8]
Impairment of goodwill (method II):
Carrying amount of Baby's net assets: 97,000
Add allocated goodwill: 7,200
Carrying amount of CGU - Baby: 104,200
Recoverable amount: 100,000
Difference - impairment loss: 4,200 Split entry between NCI and P/L.
Carrying amount of goodwill after impairment loss: 3,000
80.00%
(Fair value)
overable amount was

statements with
For simplicity, all
Mommy Group
Consolidated
St of FP (adjusted)
210,000
3,000
0
4,000
217,000
79,000
0
0
47,000
36,000
162,000
379,000
-200,000
0
-90,640
-19,360
-310,000
-2,000
0
0
0
-42,000
-25,000
-69,000
-379,000
0
www.IFRSbox.com Example 7: Negative goodwill Consolidation/Group Accounts
Mommy Corp acquired 100% share in Baby Plc. on 30 June 20X4 for CU 85 000 paid in
cash.
Prepare Mommy Group's consolidated statement of financial position as at 30 June 20X4.
Mommy Group
Statement of financial position as at 30 June 20X4 STEP 1 STEP 2 STEP 3 Consolidated
Mommy Corp. Baby Plc. Combine Eliminate Intragroup transactions St of FP
ASSETS
Non-current assets
Investment in Baby Ltd. (80 000 1CU-shares) 85,000 0 85,000 -85,000 0
209,000 90,000 299,000 214,000
Current assets
Inventories 85,000 24,000 109,000 109,000
Baby Ltd 8,000 8,000 -8,000 0
183,000 39,000 222,000 214,000
TOTAL ASSETS 392,000 129,000 521,000 428,000

Equity
260 000 shares (1 CU each) -200,000 -200,000 -200,000
80 000 shares (1 CU each) -80,000 -80,000 80,000 0
Retained earnings - pre-acquitision -62,000 -12,000 -74,000 5,000 -69,000
Non-controlling interest 0
-262,000 -92,000 -354,000 -269,000
Liabilities
Current liabilities 0 0
Trade payables 0 0
Mommy Corp. -8,000 -8,000 8,000 0
Other payables -35,000 -12,000 -47,000 -47,000
-130,000 -37,000 -167,000 -159,000
CHECK 0 0 0 0 0 0
Workings:
[1]
Goodwill:
Non-controlling interest: 0
Baby's share capital: -80,000
Baby's retained earnings: -12,000
Goodwill acquired: -7,000 Negative goodwill = gain on a bargain purchase
www.IFRSbox.com Example 8: Consideration transferred Consolidation/Group Accounts
Mommy Corp acquired 95% share in Baby Plc. on 30 June 20X4. Mommy incurred the following transactions:
1) Cash payment to Baby's former owners amounting to CU 130 000. Mommy borrowed the full amount from the BeeBank at an interest rate of 5%
p.a. and Mommy paid the fee of CU 200 for arranging the loan.
2) Cash payment to Baby's former owners amounting to CU 120 000, due in 2 years. Mommy's cost of capital is 5%.
3) Issue of 20 000 own Mommy's 1 CU shares. Market price of Mommy's share was CU 1.05 per share.
4) Cash payment depending on Baby's net profit achieved within 1 year after acquisition:
- if net profit exceeds CU 100 000, Mommy will pay CU 10 000,
- if net profit is between CU 70 000 and CU 100 000, Mommy will pay CU 7 000,
- if net profit does not exceed CU 70 000, Mommy will not pay anything.
Based on Baby's management 's forecasts of future profits and their past results, Baby's net profit will be CU 95 000 with 80% probability and CU 105
000 with 20% probability. Based on Baby's business, the probability of profit falling below CU 70 000 is remote.
Calculate fair value of consideration transferred and goodwill at acquisition date.

Note: Mommy measures non-controlling interest by the "proportionate share" method. Consideration:
The fair value of Baby's net assets at acquisition date is CU 250
000.
#1 Fair value of consideration transferred:
Cash payment (1) 130,000 Note: Neither finance cost nor loan arrangement fee of CU 200 are included in the consideration transferred.
Deferred cash payment (2)

Amount: 120,000
Discount rate: 5%
Discount factor for 5% / 2 years: 0.907 Note: DF=1/(1+5%) to the power of 2
Fair value of deferred payment: 108,844
Own shares issued (3)

Number of shares: 20,000
Market price per share: 1.05
Fair value of shares issued: 21,000
Contingent consideration (4)

The most probable outcome: 7,000 Note: it is possible to use expected value method, or most probable outcome method as here.
Discount rate: 5%
Discount factor for 5% / 1 year: 0.952
Fair value of contingent consideration: 6,667
FV of consideration transferred: 266,510 Note: if it changes in the future, then:

- when the change is as a result of additional information affecting the position on acquisition date, then recalculate goodwill
- when the change is as a result of events after acquisition date, then don't change goodwill. Instead,
#2 Goodwill: account for it as for financial instrument, or a provision, or not at all if the contingent consideration = equity instrument.
FV of consideration transferred: 266,510

Add non-controlling interest:
Baby's net assets: 250,000
Proportionate share of NCI: 5%
NCI measured at proportionate share: 12,500
Less Baby's net assets: -250,000

Example 9: Intra-group transactions
www.IFRSbox.com Consolidation + Group accounts
Provision for unrealized profit (PUP)
The same situation as in case study n. 2.

Mommy trades with toolsets.
Before the year-end, Mommy purchased 500 toolsets for total amount of CU 17 500 from an external
supplier and sold 200 toolsets to Baby for total amount of CU 8 000. Baby sold 150 of these units to
customers outside the group for total amount of CU 6 900 and 50 toolsets remained in Baby's inventories.
Prepare consolidated statement of financial position.
STEP 3 STEP 3 Mommy Group

Statement of financial position as at 31 December 20X4 STEP 1 STEP 2 Intragroup transactions Intragroup transactions Consolidated
Mommy Corp. Baby Ltd. Combine Eliminate Payables/receivables AUP - toolsets St of FP
ASSETS
Non-current assets
204,000 90,000 214,000
Current assets
Inventories 55,000 34,000 89,000 -250 88,750
Trade and other receivables 0
Baby Ltd 8,000 8,000 -8,000 0
103,000 57,000 151,750
TOTAL ASSETS 307,000 147,000 365,750

Equity
200 000 shares (1 CU each) -200,000 -200,000 -200,000
80 000 shares (1 CU each) -80,000 -80,000 80,000 0
Retained earnings -62,000 -45,000 -107,000 250 -106,750
-262,000 -125,000 -306,750
Liabilities
Trade payables 0 0
Mommy Corp. -8,000 -8,000 8,000 0
Other payables -35,000 -12,000 -47,000 -47,000
-45,000 -22,000 -59,000
TOTAL EQUITY & LIABILITIES -307,000 -147,000 0 -365,750
CHECK 0 0 0 0 0 0 0
[1]
Adjustment of unrealized profit - toolsets:
Baby's unsold inventory acquired from Mommy:

N. of toolsets (200-150) 50
Baby's acquisition cost per toolset (8 000/200) 40
Group's acquisition cost per toolset (17 500/500) 35
Unrealized profit per toolset: 5
Total unrealized profit: 250
The same situation as in case study n. 4 (Mommy owns 80% share Cont.: On 1 January 20X4, Baby sold a building to Mommy. The details are as follows:
since Baby's incorporation). - building's carrying amount in Baby's accounts before sale was CU 20 000;
This time, Baby sells toolsets to Mommy - the numbers are the - agreed selling price was CU 24 000;
same as in case study n.9 (please refer to scheme below tables). - Mommy estimated building's useful life at 10 years with straight-line depreciation.
Prepare consolidated statement of financial position.
STEP 3 STEP 3 STEP 3

Statement of financial position as at 31 December 20X4 STEP 1 STEP 2 Intragroup transactions Intragroup transactions Intragroup transactions
Mommy Corp. Baby Ltd. Combine Eliminate Payables/receivables AUP - toolsets AUP - building
ASSETS
Non-current assets
Property, plant and equipment 120,000 90,000 210,000 -4,000
Investment in Baby Ltd. (64 000 shares at 1 CU) 64,000 0 64,000 -64,000
Deferred tax asset 4,000 4,000
188,000 90,000
Current assets
Inventories 55,000 34,000 89,000 -250
Trade and other receivables
Mommy Corp. 8,000 8,000 -8,000
Other receivables 38,000 10,000 48,000
Cash and cash equivalents 26,000 5,000 31,000
119,000 57,000
TOTAL ASSETS 307,000 147,000

Equity
200 000 shares (1 CU each) -200,000 -200,000
80 000 shares (1 CU each) -80,000 -80,000 80,000
Retained earnings -62,000 -45,000 -107,000 9,000 200 3,200
Non-controlling interest -25,000 50 800
-262,000 -125,000
Liabilities
Deferred tax liability -2,000 -2,000
Current liabilities
Trade payables 0
Baby ltd. -8,000 -8,000 8,000
Other payables -27,000 -20,000 -47,000
Loans repayable within 12 months -10,000 -10,000
-45,000 -22,000
TOTAL EQUITY & LIABILITIES -307,000 -147,000 0
CHECK 0 0 0 0 0 0 0
[1]
Adjustment of unrealized profit - toolsets:
Mommy's unsold inventory acquired from Baby:

N. of toolsets (200-150) 50
Mommy's acquisition cost per toolset (8 000/200) 40
Group's acquisition cost per toolset (17 500/500) 35
Unrealized profit per toolset: 5
Total unrealized profit: 250
thereof: attributable to shareholders of Mommy: 200
Only if parent buys from subsidiary!
attributable to non-controlling interest: 50 When parent sells to subsidiary, the entry is the same as
in case study n. 9.
[2]
Adjustment of unrealized profit - building:
Mommy's acquision cost of building: 24,000
Group's carrying amount before sale: 20,000
Unrealized profit: 4,000
thereof: attributable to shareholders of Mommy: 3,200
attributable to non-controlling interest: 800
[3]
Adjustment of depreciation:
Annual depreciation expense (4 000/10) 400
thereof: attributable to shareholders of Mommy: 320
attributable to non-controlling interest: 80
STEP 3 Mommy Group

Intragroup transactions Consolidated
Depreciation on AUP St of FP
400 206,400
0
4,000
210,400
88,750
0
0
48,000
31,000
167,750
378,150
-200,000
0
-320 -94,920
-80 -24,230
-319,150
-2,000
0
0
0
-47,000
-10,000
-59,000
-378,150
0 0
Example 11: Consolidation adjustments
Mommy Corp acquired 80% share in Baby Plc. on 1 January 20X4 when Baby's retained earnings amounted to CU 12 000. Mommy discovered the following:
- Independent expert valuator set the fair value of Baby's building to CU 35 000 on 1 January 20X4, while its carrying amount was CU 30 000 in Baby's financial
statements. Remaining useful life is 20 years.
- Baby created an electronic course in the form of videos (not recognized in Baby's financial statements). It can be sold to third parties and independent expert set
its fair value at CU 4 000. Remaining useful life is 5 years.
- Baby is in the negotiations with the potential customer about the contract for the services amounting to CU 8 000.
The market price of Baby's shares just before the acquisition date was CU 1.2 per share. Mommy decided to value non-controlling interest at fair value.
Prepare consolidated statement of financial position of Mommy Group as at 31 December 20X4 (individual statements of financial position are below) .
Consolidation adjustments @31/12/20X4 Mommy Group

Statement of financial position as at 31 December 20X4 FV adjustment of Baby Plc. STEP 1 STEP 2 STEP 3 Consolidated
Intangible asset
Mommy Corp. Baby Plc. buildings after adjustments Combine Eliminate Intragroup transactions St of FP
ASSETS
Non-current assets
Property, plant and equipment 120,000 90,000 4,750 94,750 214,750 214,750
Intangible assets 3,200 3,200 3,200 3,200
Goodwill acquired in a business combination 0 0 8,200 8,200
Investment in Baby Ltd. (64 000 1CU-shares) 90,000 0 0 90,000 -90,000 0
Deferred tax asset 4,000 0 4,000 4,000
214,000 90,000 97,950 311,950 230,150
Current assets
Inventories 55,000 24,000 24,000 79,000 79,000
Trade and other receivables 0 0 0
Baby Ltd 8,000 0 8,000 -8,000 0
Other receivables 30,000 12,000 12,000 42,000 42,000
Cash and cash equivalents 23,000 8,000 8,000 31,000 31,000
116,000 44,000 44,000 160,000 152,000
TOTAL ASSETS 330,000 134,000 141,950 471,950 382,150

Equity
200 000 shares (1 CU each) -200,000 0 -200,000 -200,000
80 000 shares (1 CU each) -80,000 -80,000 -80,000 80,000 0
Retained earnings -90,000 -17,000 -4,750 -3,200 -24,950 -114,950 21,790 -93,160
Non-controlling interest 0 -19,990 -19,990
-290,000 -97,000 -104,950 -394,950 -313,150
Liabilities
Deferred tax liability -2,000 -2,000 -2,000 -2,000
Trade payables 0
Mommy Corp. -8,000 -8,000 -8,000 8,000 0
Other payables -30,000 -12,000 -12,000 -42,000 -42,000
Loans repayable within 12 months -10,000 -15,000 -15,000 -25,000 -25,000
-40,000 -37,000 -37,000 -77,000 -69,000
TOTAL EQUITY & LIABILITIES -330,000 -134,000 -141,950 -471,950 -382,150
CHECK 0 0 0 0 0 0 0 0 0
Workings:
[1]
Fair value adjustment - Baby's buildings
Fair value at 1 January 20X4 35,000
Carrying amount at 1 January 20X4 30,000 It falls to Baby's PRE-acquisition retained earnings => it's a part
Fair value adjustment at 1 January: 5,000 of goodwill calculation.
Depreciation of FV adjustment (1 year/20 years) -250 It falls to Baby's POST-acquisition retained earnings => NCI's
share is eliminated.
Example 11: Consolidation adjustments
It falls to Baby's POST-acquisition retained earnings => NCI's

FV adjustment at 31 December 20X4: 4,750 share is eliminated.
[2]
Recognition of unrecognized asset - course: It falls to Baby's PRE-acquisition retained earnings => it's a part
of goodwill calculation.
Fair value at 1 January 20X4 4,000
Amortization of intangible asset (1 year/5 years) -800
Carrying amount at 31 December 20X4: 3,200 It falls to Baby's POST-acquisition retained earnings => NCI's
share is eliminated.
Note: Don't recognize Baby's potential contract, as it does not meet the
definition of an asset in line with the Conceptual Framework.
[3]
Goodwill at 1/1/20X4:
FV of NCI at acquisition:
Market price of Baby's share before acquisition: 1.20 CU per share
Amount of shares belonging to NCI: 16,000 Note: Look to Baby's statement of FP, caption "share capital" (total amount of shares = 80 000)
FV of NCI at acquisition: 19,200
Less Baby's net assets at acquisition
Baby's share capital: 80,000
Baby's retained earnings before adjustments: 12,000
Baby's PRE-acquisition retained earnings after FV adjustments
Add FV adjustment of building 5,000 (=CU 21 000).
Add unrecognized intangible asset 4,000
-101,000
[4]
Non-controlling interest (fair value) at 31/12/20X4:
Non-controlling interest at acquisition: -19,200
NCI's share on post-acquisition reserves:
Baby's post-acquisition retained earnings before adj -5,000
Depreciation of FV adjustment on buildings (5 000/20 250
Amortization of intangible asset (4 000/5) 800
Baby's post-acquisition retained earnings: -3,950
NCI's share on post-acquisition RE: -790
[5]
Retained earnings of Baby attributable to Mommy:
Baby's post-acquisition retained earnings [4] -3,950
Mommy's share on post-acquisition RE: -3,160
Example 12: Complex case study
www.IFRSbox.com ("exam-style") Consolidation/Group Accounts
Mommy Corp acquired 80% share in Baby Plc. on 1 January 20X4 when Baby's retained earnings amounted to CU 12 000. The following
transactions have not been included in the financial statements:
- PPE of Baby includes machinery with acquisition cost of CU 20 000 and accumulated depreciation of CU 8 500. Fair value cannot be reliably set,
but the gross replacement cost is CU 16 000, net replacement cost is CU 13 000 and net realizable value is CU 4 000. Baby plans to utilize this
machinery until the end of its useful life. Remaining useful life is 4 years.
- Mommy bought inventory from Baby in total amount of CU 6 000. Baby's cost was CU 5 100 from the external supplier. At the year-end, 2/3 of
inventories from Baby remained unsold at Mommy's warehouse.
Mommy decided to value non-controlling interest at the proportionate share on the Baby's net assets.
Prepare consolidated statement of financial position of Mommy Group as at 31 December 20X4 (individual statements of financial position are
below) .
Mommy Group
Statement of financial position as at 31 December 20X4 Consolidated Reference
Mommy Corp. Baby Plc. St of FP
ASSETS
Non-current assets
Property, plant and equipment 120,000 90,000 211,125 [1]
Goodwill acquired in a business combination 5,200 [2]
Investment in Baby Ltd. (64 000 1CU-shares) 80,000 0 0
Careful!!!
You might need to recognize deferred tax from FV adjustments,
Deferred tax asset 4,000 4,000 or recognition of unrecognized assets, or other consolidation
204,000 90,000 220,325 adjustments.
Current assets It can be both asset and liability.
Inventories 55,000 24,000 78,400 [3]
Trade and other receivables
Baby Ltd 8,000 0 Note: eliminated as intragroup
Other receivables 35,000 12,000 47,000
Cash and cash equivalents 28,000 8,000 36,000
126,000 44,000 161,400
TOTAL ASSETS 330,000 134,000 381,725

Equity
200 000 shares (1 CU each) 200,000 200,000
80 000 shares (1 CU each) 80,000 0 Note: only that of Mommy
Retained earnings 90,000 17,000 93,220 [4]
Non-controlling interest 19,505 [5]
290,000 97,000 312,725
Liabilities
Deferred tax liability 2,000 2,000
Current liabilities
Trade payables
Mommy Corp. 8,000 0 Note: eliminated as intragroup
Other payables 30,000 12,000 42,000
Loans repayable within 12 months 10,000 15,000 25,000
40,000 37,000 69,000
TOTAL EQUITY & LIABILITIES 330,000 134,000 381,725
CHECK 0 0 0
Workings:
[1]
Consolidated PPE:
Mommy's PPE: 120,000
Baby's PPE before adjustment: 90,000 IFRS 3 says that fair value of PPE should be determined by
FV adjustment: market value. If not possible, use depreciated (net) replacement
Net replacement cost at 1 January 20X4 13,000 cost, reflecting normal business practice.
The same for inventories (raw materials): use net replacement
cost (although not here in the question).
Example 12: Complex case study
IFRS 3 says that fair value of PPE should be determined by
www.IFRSbox.com ("exam-style") Consolidation/Group Accounts
market value. If not possible, use depreciated (net) replacement
cost, reflecting normal business practice.
Carrying amount at 1 January 20X4 11,500 The same for inventories (raw materials): use net replacement
Fair value adjustment at 1 January: 1,500 cost (although not here in the question).
Depreciation of FV adjustment (1 year/4 years) -375

FV adjustment at 31 December 20X4: 1,125
Consolidated PPE @ 31/12/20X4 211,125
[2]
Goodwill at 1/1/20X4:
NCI on acquisition:
Baby's net assets on acquisition:
Baby's share capital 80,000.00
Baby's retained earnings 12,000.00
FV adjustment on acquisition 1,500.00
Baby's net assets on acquisition: 93,500.00
NCI on acquisition (20% on Baby's net assets): 18,700
Less Baby's net assets on acquisition: -93,500
[3]
Consolidated inventories:
Mommy's inventories: 55,000
Baby's inventories: 24,000
Adjustment of unrealized profit:
Unsold inventory - cost of Mommy (2/3 of 6 000) 4,000
Unsold inventory - cost of Group (2/3 of 5 100) 3,400
Total unrealized profit: -600
thereof: attributable to shareholders of Mommy: -480
attributable to non-controlling interest: -120
Consolidated inventories: 78,400
[4]
Retained earnings of Mommy: 90,000
Baby's post-acquisition retained earnings:
Per Baby's statement of FP 17,000
Less Baby's retained earnings at acquisition -12,000
Add post-acquisition FV adjustment -375
Add adjustment of unrealized profit: -600
Baby's post-acquisition retained earnings: 4,025
Mommy's share on post-acquisition RE: 3,220
Consolidated retained earnings: 93,220
[5]
Non-controlling interest (proportionate share) at 31/12/20X4:
Non-controlling interest at acquisition: 18,700
NCI's share on post-acquisition reserves:
Baby's post-acquisition retained earnings [4]: 4,025
NCI's share on post-acquisition RE: 805
Non-controlling interest: 19,505
Example 13: Basic statement of P/L and OCI
Mommy Corp has owned 80% shares of Baby Ltd since Baby's incorporation.
During 20X4, Mommy sold goods to Baby in total amount of CU 35 000.
Below there are statements of P/L and OCI of both Mommy and Baby for the year ended 31 December 20X4.
Prepare consolidated statement of profit or loss and other comprehensive income of Mommy Group for the year
ended 31 December 20X4.
Mommy Group
Statement of P/L and OCI for the year ended 31 December 20X4 STEP 1 STEP 2 STEP 3 Consolidated
Mommy Corp. Baby Ltd. Combine Eliminate Intragroup transactions St of P/L and OCI
PROFIT OR LOSS
Revenues from sales of goods 110,000 55,000 165,000 -35,000 130,000
Cost of sales -88,000 -43,000 -131,000 35,000 -96,000
Gross profit 22,000 12,000 34,000 34,000
Marketing and distribution expenses -3,500 -2,200 -5,700 -5,700
Administrative and other expenses -2,000 -1,000 -3,000 -3,000
Profit from operations 16,500 8,800 25,300 25,300
Finance cost -500 -30 -530 -530
Profit before tax 16,000 8,770 24,770 24,770
Income tax expense -3,000 -1,400 -4,400 -4,400
Net profit for the year 13,000 7,370 20,370 20,370
OTHER COMPREHENSIVE INCOME

Items that will not be reclassified to P/L
Gains on from property revaluation 500 120 620 620
Other comprehensive income for the year 500 120 620 620
TOTAL COMPREHENSIVE INCOME

FOR THE YEAR 13,500 7,490 20,990 20,990
Profit attributable to:

Owners of the parent 18,896
Non-controlling interest 1,474
Total comprehensive income attributable to:

Non-controlling interest 1,498
Careful!!!
Here, you need to eliminate sales and cost of sales for ALL
transactions during the reporting period - not only the open
balances at the year end (as in consolidated statement of FP).
Example 14: Statement of P/L and OCI - mid-year acquisition
Mommy Corp acquired 80% shares of Baby Ltd on 1 May 20X4.

During 20X4, Mommy sold goods to Baby in total amount of CU 35 000, thereof:
-CU 12 000 before the acquisition date; and
-CU 23 000 after the acquisition date.
Baby paid dividends of CU 1 000 and Mommy of CU 8 000 on 31 December 20X4. Baby's share capital is CU 80 000.
Below there are statements of P/L and OCI of both Mommy and Baby for the year ended 31 December 20X4.
Prepare consolidated statement of profit or loss and other comprehensive income of Mommy Group for the year ended 31 December 20X4. and
extract from consolidated statement of changes in equity (retained earnings and non-controlling interest).
Mommy Group
Statement of P/L and OCI for the year ended 31 December 20X4 STEP 1 STEP 3 Consolidated
Mommy Corp. Baby Ltd. Baby (8/12) Combine Intragroup transactions St of P/L and OCI
PROFIT OR LOSS
Revenues from sales of goods 110,000 55,000 36,667 146,667 -23,000 123,667
Cost of sales -88,000 -43,000 -28,667 -116,667 23,000 -93,667
Gross profit 22,000 12,000 8,000 30,000 30,000
Marketing and distribution expenses -3,500 -2,200 -1,467 -4,967 -4,967
Administrative and other expenses -2,000 -1,000 -667 -2,667 -2,667
Other income - dividend received from Baby 800 800 -800 0
Profit from operations 17,300 8,800 5,867 23,167 22,367
Finance cost -500 -30 -20 -520 -520
Profit before tax 16,800 8,770 5,847 22,647 21,847
Income tax expense -3,000 -1,400 -933 -3,933 -3,933
Net profit for the year 13,800 7,370 4,913 18,713 17,913

Gains on from property revaluation 500 120 80 580 580
Other comprehensive income for the year 500 120 80 580 580

FOR THE YEAR 14,300 7,490 4,993 19,293 18,493


Retained earnings b/f: 50,000 20,000

Retained earnings c/f: 55,800 26,370 Careful!!!
- Eliminate just post-acquisition intra-group transactions;
Statement of changes in equity - Eliminate parent's dividend income from subsidiary in full.
(extract)
Retained earnings NCI
Balance b/f (at 1 January 20X4) 50,000 0
Total comprehensive income for the year 16,931 999 Careful!!!
Dividends paid -8,000 -200 1. TCI attributable to parent is split into several columns:
Acquisition of Baby 20,499 [2] - net profit shows up in retained earnings (16 931)
Balance c/f (at 31 December 20X4) 58,931 21,298 - other components of TCI show up in the appropriate line, e.g.
[1] here, revaluation surplus shows in "revaluation reserve" column
(500+8/12*120*80%)
2. TCI attributable to NCI is shown solely in the column "NCI", it
Workings:
is not split.
[1]
here, revaluation surplus shows in "revaluation reserve" column
(500+8/12*120*80%)
2. TCI attributable to NCI is shown solely in the column "NCI", it
Example 14: Statement of P/L and OCI - mid-year acquisition
www.IFRSbox.com is not split. Consolidation/Group Accounts
Retained earnings of Mommy: 55,800

Less dividend income from Baby (eliminated) -800
Baby's post-acquisition retained earnings:
Per Baby's statement of P/L 4,913
Mommy's share on post-acquisition RE: 3,931
Consolidated retained earnings: 58,931
[2]
Non-controlling interest on acquisition:
Baby's net assets on acquisition:
Share capital: 80,000
Retained earnings on acquisition:
Retained earnings b/f: 20,000
Net profit for 4 monhts before acquisition: 2,457
Revaluation surplus before acquisition 40
Retained earnings on acquisition total: 22,497
Baby's net assets + other equity components on acquisition total: 102,497
NCI's share (20%): 20,499
Example 15: Consolidated statement of P/L and OCI
(AUP, FV adjustments)
Mommy Corp acquired 75% share in Baby Plc. on 1 January 20X4 when Baby's retained earnings amounted to CU 12 000. The following
transactions have not been included in the financial statements:
- PPE of Baby includes machinery with acquisition cost of CU 20 000 and accumulated depreciation of CU 8 500. Fair value cannot be reliably set,
but the gross replacement cost is CU 16 000, net replacement cost is CU 13 000 and net realizable value is CU 4 000. Baby plans to utilize this
machinery until the end of its useful life. Remaining useful life is 4 years.
- During 20X4, Mommy bought inventories from Baby in total amount of CU 16 000, thereof CU 6 000 unpaid at the year-end. Mommy sold almost
all inventories, however, inventories with cost of CU 10 000 remained in Mommy's warehouse. Baby's mark-up is 25%.
Prepare consolidated statement of profit or loss and other comprehensive income of Mommy Group for the year ended 31 December 20X4.
Mommy Group
Statement of P/L and OCI for the year ended 31 December 20X4 Consolidated
Mommy Corp. Baby Ltd. St of P/L and OCI
PROFIT OR LOSS
Revenues from sales of goods 110,000 55,000 149,000
Cost of sales -88,000 -43,400 -117,400 [1]
Gross profit 22,000 11,600 31,600
Marketing and distribution expenses -3,500 -2,200 -5,700
Administrative and other expenses -2,000 -4,000 -6,375 [2]
Profit from operations 16,500 5,400 19,525
Finance cost -500 -30 -530
Profit before tax 16,000 5,370 18,995
Income tax expense -3,000 -1,370 -4,370
Net profit for the year 13,000 4,000 14,625

Gains on from property revaluation 500 120 620
Other comprehensive income for the year 500 120 620

FOR THE YEAR 13,500 4,120 15,245

Owners of the parent 14,219 [3]
Non-controlling interest 406 [4]

[1]
Consolidated cost of sales:
Mommy's cost of sales: 88,000
Baby's cost of sales: 43,400
Less intra-group sales: -16,000
Adjustment of unrealized profit:
Unsold inventory - cost of Mommy 10,000
Unsold inventory - cost of Baby (25% mark-up) 8,000
Consolidated cost of sales: 117,400
[2]
Consolidated administrative expenses:
Mommy's administrative expenses: 2,000
Baby's administrative expenses: 4,000
Example 15: Consolidated statement of P/L and OCI
(AUP, FV adjustments)
FV adjustment:
Net replacement cost at 1 January 20X4 13,000
Carrying amount at 1 January 20X4 11,500
Fair value adjustment at 1 January: 1,500
Depreciation of FV adjustment 375
Consolidated administrative expenses: 6,375
[3]
Net profit attributable to owners of the parent:
Mommy's net profit: 13,000
Mommy's share on Baby's net profit: 3,000
Less adjustment of unrealized profit attributable to Mommy -1,500
Careful!!!
- If unrealized profit is made by a subsidiary => you need to split it
Less FV adjustment attributable to Mommy: -281
between owners of the parent and NCI;
Net profit attributable to parent: 14,219 - If unrealized profit is made by a parent => don't split and
attribute full adjustment to the owners of the parent.
[4] FV adjustments on acquisition
Net profit attributable to NCI: As these adjustments mostly relate to subsidiaries's net assets,
NCI's share on Baby's net profit: 1,000 you need to split them between owners of the parent and NCI.
Less adjustment of unrealized profit attributable to NCI: -500
Less FV adjustment attributable to NCI: -94
Net profit attributable to NCI: 406
www.IFRSbox.com Example 4 - Statement of Profit or Loss and Other Comprehensive Income IAS 1
JBC Group - Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 20X4
(in thousands EUR)
20X4 20X3
PROFIT:
Revenues 643,500.00 585,750.00
Cost of sales ( 404,250.00) ( 379,500.00)
Gross profit 239,250.00 206,250.00
Other income 34,101.00 18,645.00
Distribution costs ( 14,850.00) ( 14,355.00)
Administrative expenses ( 33,000.00) ( 34,650.00)
Other expenses ( 3,465.00) ( 1,980.00)
Profit from operations 222,036.00 173,910.00
Finance cost ( 13,200.00) ( 12,375.00)
Share of profit of associates 57,915.00 49,665.00
Profit before tax 266,751.00### 211,200.00
Income tax expense ( 66,688.00) ( 52,800.00)
Profit for the year from continuing operations 200,063.00 158,400.00
Loss for the year from discontinued operations - ( 50,325.00)
AA Profit for the year 200,063.00 108,075.00
OTHER COMPREHENSIVE INCOME:

Items that will not be reclassified to profit or loss:
Available-for-sale financial assets ( 31,899.00) 55,001.00
Actuarial gains (losses) on defined benefit pension plan ( 1,101.00) 2,199.00
Gains on property revaluation 1,539.00 5,556.00
Share of other comprehensive income of associates 660.00 ( 1,155.00)
Income tax relating to component of other
comprehensive income 7,701.00 ( 15,401.00)
Items that may be reclassified subsequently to profit or loss:

Cash flow hedges - -
Exchange differences on translating foreign operations - -
Income tax relating to items that may be reclassified - -
BB Other comprehensive income for the year, net of tax ( 23,100.00) 46,200.00
TOTAL COMPREHENSIVE INCOME FOR THE YEAR: 176,963.00 154,275.00

Owners of the parent 160,050.00 86,460.00
Non-controlling interest 40,013.00 21,615.00
AA Total profit: 200,063.00 108,075.00

Owners of the parent 141,570.00 123,420.00
Non-controlling interest 35,393.00 30,855.00
AA+BB Total comprehensive income: 176,963.00 154,275.00
Earnings per share (in EUR): 0.76 0.50

www.IFRSbox.com Example 5 - Statement of Changes in Equity IAS 1
JBC Group - Statement of Changes in Equity for the year ended 31 December 20X4
(in thousands EUR)
Total before Non-

Share Share Retained Revaluation of Reval.
non-controlling controlling Total equity
capital premium earnings AFS assets surplus
interest interest
Balance at 1 Jan 20X3 990,000 1,100 194,865 ( 660) - 1,185,305 49,170 1,234,475
Comparatives
Changes in accounting policy 660 660 165 825

A
20X3
Restated balance 990,000 1,100 195,525 ( 660) - 1,185,965 49,335 1,235,300
Changes in equity for 20X3:

Dividends paid ( 16,500) ( 16,500) - ( 16,500) B
TCI for the year 86,460 34,320 2,640 123,420 30,855 154,275
Balance at 31 Dec 20X3: 990,000 1,100 265,485 33,660 2,640 1,292,885 80,190 1,373,075 C=A+B
Current year
Changes in equity for 20X4:

Issue of shares
20X4
82,500 200 82,700 82,700

Dividends paid ( 24,750) ( 24,750) ( 24,750) D
TCI for the year 160,050 ( 19,800) 1,320 141,570 35,393 176,963
Balance at 31 Dec 20X4: 1,072,500 1,300 400,785 13,860 3,960 1,492,405 115,583 1,607,988 E=C+D
AA BB CC=AA+BB
E=C
Example 16: Investment in associate
Mommy Corp acquired 30% share in Nephew Plc. for CU 30 000 on 1 January 20X4 when Nephew's retained earnings amounted to CU 12 000. Mommy has
significant influence of Nephew and selected to present investment in Nephew at cost in its separate financial statements under IAS 27.
On 31 December 20X4, Nephew paid out the dividend in total amount of CU 1 000 (it has not been reflected in the financial statements of Mommy,
but it was reflected in the financial statements of Nephew).
Show what journal entries Mommy needs to make in its separate financial statements and prepare consolidated statement of financial position at 31 December
20X4.
Mommy: Separate St of FP Mommy Group Consolidated St of FP

Statement of financial position as at 31 December 20X4 Dividend from Re-measurement of Dividend from
St of FP St of FP
Mommy Corp. Nephew Nephew investment Nephew
ASSETS
Non-current assets
Investment in Nephew 30,000 0 30,000 1,800 -300 31,500
199,000 90,000 199,000 200,500
Current assets
Inventories 60,000 24,000 60,000 60,000
Nephew 8,000 8,000 8,000
Cash and cash equivalents 28,000 8,000 300 28,300 300 28,300
131,000 44,000 131,300 131,300
TOTAL ASSETS 330,000 134,000 330,300 331,800

Equity
200 000 shares (1 CU each) -200,000 -200,000 -200,000
80 000 shares (1 CU each) -80,000 0 0
Retained earnings -90,000 -17,000 -300 -90,300 -1,800 -91,800
-290,000 -97,000 -290,300 -291,800
Liabilities
Deferred tax liability -2,000 0 0
Current liabilities
Trade payables 0
Mommy Corp. -8,000 0 0
Other payables -30,000 -12,000 -30,000 -30,000
-40,000 -37,000 -40,000 -40,000
CHECK 0 0 0 0 0 0 0
1. Initial recognition of an associate:

Cost of investment: 30,000
Less Mommy's share on FV of Nephew's net assets:
Nephew's share capital: -80,000
Nephew's retained earnings on acquisition: -12,000
Total Nephew's net assets: -92,000
Mommy's share: -27,600
Goodwill: 2,400
Journal entry:
Debit F/P: Investment in an associate 30,000

Credit Cash (bank accounts)
Debit F/P: Investment in an associate

Credit Cash (bank accounts) -30,000
0
2. Subsequent measurement of an associate (consolidated FS)

Nephew's profit for 20X4:
Retained earnings Per Nephew's St of FP: -17,000
Less Retained earnings on 1 January 20X4: 12,000
Add back dividend paid: -1,000
Nephew's profit for 20X4: -6,000
Journal entry:
Credit P/L: Share of profit of associates -1,800
0
www.IFRSbox.com (FV adjustments, intragroup sales) Consolidation/Group Accounts
Mommy Corp acquired 30% share in Nephew Plc. for CU 32 000 on 1 January 20X4 when Nephew's retained earnings amounted to CU 12 000. All Nephew's assets and
liabilities were at fair values, except for a building carried at CU 40 000 - its' fair value was CU 43 000. Remaining useful life is 10 years.
In 20X4, Nephew revalued its equity investment through OCI by CU 2 500.
During 20X4, the following transactions happened between Mommy and Nephew:
- Mommy sold goods with cost of CU 6 000 to Nephew for CU 7 600 on 1 December 20X4. At the end of 20X4, 50% of these goods remained unsold.
-Nephew sold goods with cost of CU 2 000 to Mommy for CU 2 300 on 30 December 20X4. At the end of 20X4, all these goods remained unsold.
On 31 December 20X4, Nephew paid out the dividend in total amount of CU 1 000 (it has been reflected in both the financial statements of Mommy and
Nephew).
Show what journal entries Mommy needs to make in its separate financial statements and prepare consolidated statement of financial position at 31 December 20X4.
Statement of financial position as at 31 December 20X4 Statement of P/L and OCI for the year ended 31 December 20X4
St of FP P/L and OCI
Mommy Corp. Nephew Mommy Corp. Nephew
ASSETS PROFIT OR LOSS

Non-current assets Revenues from sales of goods 110,000 55,000 110,000
Property, plant and equipment 165,000 90,000 165,000 Cost of sales -88,000 -44,370 -88,330 [4.1, 4.2]
Investment in Nephew 32,000 0 33,920 [6] Gross profit 22,000 10,630 21,670
Equity investments through OCI 8,000 0 Marketing and distribution expenses -3,500 -2,200 -3,500
Deferred tax asset 4,000 4,000 Administrative and other expenses -2,000 -1,000 -2,000
201,000 98,000 202,920 Other income - dividend received from Nephew 300 0 [3]
Current assets Profit from operations 16,800 7,430 16,170
Inventories 60,000 22,500 59,910 [4.2] Finance cost -500 -30 -500
Trade and other receivables Share of profit of associate 1,710 [5]
Nephew 8,000 8,000 Profit before tax 16,300 7,400 17,380
Other receivables 35,000 12,000 35,000 Income tax expense -3,000 -1,400 -3,000
Cash and cash equivalents 26,000 8,000 26,000 Net profit for the year 13,300 6,000 14,380
129,000 42,500 128,910
TOTAL ASSETS 330,000 140,500 331,830 OTHER COMPREHENSIVE INCOME
EQUITY & LIABILITIES Gains on from property revaluation 0 2,500
Equity Share of OCI of associate 750 [2]
200 000 shares (1 CU each) -200,000 -200,000 Other comprehensive income for the year 0 2,500 750
80 000 shares (1 CU each) -80,000
Revaluation reserve -2,500 -750 [2] FOR THE YEAR 13,300 8,500 15,130
Retained earnings -90,000 -17,000 -91,080 [5]
-290,000 -99,500 -291,830
Liabilities Verify the movement:
Non-current liabilities Group's retained earnings b/f:
Deferred tax liability -3,000 0 Mommy's retained earnings @31 Dec 20X4 -90,000 (the same as group's RE, as there was
Current liabilities Less Mommy's net profit for the year 13,300
Trade payables 0 Group's retained earnings @1 Jan 20X4 -76,700
Mommy Corp. -8,000 0 Add consolidated net profit for the year: -14,380
Other payables -30,000 -15,000 -30,000 Group's retained earnings @31 Dec 20X4: -91,080
-40,000 -41,000 -40,000
TOTAL EQUITY & LIABILITIES -330,000 -140,500 -331,830
CHECK 0 0 0
1. Initial recognition of an associate:

Cost of investment: 32,000
Less Mommy's share on FV of Nephew's net assets:
Nephew's share capital: -80,000
Nephew's retained earnings on acquisition: -12,000
FV adjustment related to building -3,000
Total Nephew's net assets: -95,000

Goodwill: 3,500
Journal entry:

Credit Cash (bank accounts) -32,000
0
2. Revaluation of Nephew's equity investments:

Nephew's other comprehensive income for 20X4: -2,500
Mommy's share: -750
Journal entry:
750
Debit F/P: Investment in an associate
Credit P/L: Share in OCI of associates -750
0
3. Dividend received from Nephew:

Total dividends paid out: 1,000
Mommy's share: 300
Journal entry:
300
Debit F/P: Retained earnings
Credit F/P: Investment in an associate -300
0
4. Upstream and downstream transactions:

4.1 Downstream - sale of goods by Mommy to Nephew
Mommy's revenue: 7,600
Mommy's cost of sales: 6,000
Total profit: 1,600
thereof: unrealized profit (on unsold goods): 800
Mommy's share on unrealized profit: 240
Journal entry:
240
Debit F/P: Retained earnings (COS in P/L)
Credit F/P: Investment in an associate -240
0
4.2 Upstream - sale of goods by Nephew to Mommy

Nephew's revenue: 2,300
Nephew's cost of sales: 2,000
Total profit: 300
thereof: unrealized profit (on unsold goods): 300
Mommy's share on unrealized profit: 90
Journal entry:
90
Debit F/P: Retained earnings (COS in P/L)
Credit F/P: Inventories -90
0
5. Consolidated retained earnings at 31 Dec 20X4:

Nephew's profit for 20X4:
Retained earnings per Nephew's St of FP: -17,000
Less Retained earnings on 1 January 20X4: 12,000
Add back dividend paid: -1,000
Less adjustment to reflect effect of FV adjustment 300

Nephew's profit for 20X4: -5,700
Mommy's share on Nephew's profit: -1,710 Journal entry: Debit F/P: Investment in associate 1,710
Add Mommy's retained earnings: 0 Credit F/P: Retained earnings -1,710
Mommy's retained earnings per St of FP: -90,000 0
Less adjustment of dividend received from N: 300
Mommy's retained earnings: -89,700
Intra-group transactions:
Unrealized profit - downstream transaction: 240
Unrealized profit - upstream transaction: 90
Eliminating 30% share on intra-group profit: 330
6. Investment in Nephew at 31 Dec 20X4

Investment in Nephew - initial recognition (or b/f) 32,000 ref. [1]
Adjustments:
Mommy's share on Nephew's OCI in 20X4: 750 ref. [2]
Dividends received from Nephew: -300 ref. [3]
Downstream transaction: -240 ref. [4.1]
Mommy's share on Nephew's profit in 20X4: 1,710 ref. [5]
Investment in Nephew at 31 December 20X4: 33,920
group's RE, as there was no Nephew)

N. Title Location: List of Examples Consolidation + Group Accounts

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N. Title Location: List of Examples Consolidation + Group Accounts

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www.IFRSbox.

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EQUITY & LIABILITIES

EQUITY & LIABILITIES

EQUITY & LIABILITIES

Consolidated retained earnings: -98,000

EQUITY & LIABILITIES

Baby's share capital: -80,000

STEP 2 STEP 2 Mommy Group Impairment Impairment

EQUITY & LIABILITIES

Baby's post-acquisition retained earnings: -5,000

Carrying amount of goodwill after impairment loss: 2,400

Carrying amount of goodwill after impairment loss: 3,000

overable amount was

EQUITY & LIABILITIES

Calculate fair value of consideration transferred and goodwill at acquisition date.

#1 Fair value of consideration transferred:

Deferred cash payment (2)

Own shares issued (3)

Contingent consideration (4)

FV of consideration transferred: 266,510 Note: if it changes in the future, then:

FV of consideration transferred: 266,510

Goodwill acquired: 29,010

The same situation as in case study n. 2.

STEP 3 STEP 3 Mommy Group

EQUITY & LIABILITIES

Baby's unsold inventory acquired from Mommy:

STEP 3 STEP 3 STEP 3

EQUITY & LIABILITIES

Mommy's unsold inventory acquired from Baby:

STEP 3 Mommy Group

Consolidation adjustments @31/12/20X4 Mommy Group

EQUITY & LIABILITIES

It falls to Baby's POST-acquisition retained earnings => NCI's

EQUITY & LIABILITIES

Depreciation of FV adjustment (1 year/4 years) -375

OTHER COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE INCOME

Profit attributable to:

Total comprehensive income attributable to:

Mommy Corp acquired 80% shares of Baby Ltd on 1 May 20X4.

OTHER COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE INCOME

Profit attributable to:

Total comprehensive income attributable to:

Retained earnings b/f: 50,000 20,000

Retained earnings of Mommy: 55,800

OTHER COMPREHENSIVE INCOME

TOTAL COMPREHENSIVE INCOME

Profit attributable to:

Total comprehensive income attributable to:

OTHER COMPREHENSIVE INCOME:

Items that may be reclassified subsequently to profit or loss:

TOTAL COMPREHENSIVE INCOME FOR THE YEAR: 176,963.00 154,275.00

Profit attributable to:

Total comprehensive income attributable to:

Earnings per share (in EUR): 0.76 0.50

Total before Non-

Changes in accounting policy 660 660 165 825

Restated balance 990,000 1,100 195,525 ( 660) - 1,185,965 49,335 1,235,300

Changes in equity for 20X3:

Changes in equity for 20X4:

82,500 200 82,700 82,700