Group Accounting.ppt

1、1,Group Accounting,Syllabus D IFRS 3 Business Combinations IFRS10 Consolidated financial statements IAS 28 Investments in Associates,3,Type of business combination,Merger吸收合并 One company obtains the assets, and often the liabilities, of another company, which dissolves as a legal corporation. One co

2、mpany obtains the all capital stock of another company, which dissolves as a legal corporation and remains as a division of the acquirer. Consolidation新设合并 A newly created company receives either the assets or capital stock of two or more original companies which dissolve as legal corporations.,4,Co

3、ntinued,Acquisition控股合并 One company achieves legal control over another company which remains in existence as a legal corporation. Subsidiary: an enterprise that is controlled by another enterprise. Its financial records are not directly affected by the combination. Parent: an enterprise that has on

4、e or more subsidiaries. It establishes investment account to reflect the combination.,5,Group,A parent and all its subsidiaries. Parent and subsidiaries in a group are respectively separate legal entities while the group is a single economic unit. Though parent and subsidiaries in a group maintain t

5、heir independent accounting records, consolidated financial statements of a group should be prepared at each reporting date after business combination to reflect the financial position, performance and cash flows of the group as a single economic unit. Substance over form is applied.,6,合并范围,Control

6、is the sole basis for consolidation /p6 An investor controls an investee when the investor is exposed, or has rights, to variable returns from involvement with the investee and has the ability to affect those returns through its power over the investee. The power to govern the financial and operatin

7、g policies of an enterprise so as to obtain benefits from its activities.,7,Situations where control exists The parent owns, directly or indirectly through subsidiaries, more than 50% of the voting power of an enterprise unless, in exceptional circumstances, it can be clearly demonstrated that such

8、ownership does not constitute control (the subsidiary is controlled by a government, court administrator or regulator because of its bankruptcy). Considering the effect of potential voting rights on control,8,Continued,51%,9,Continued,If owns no more than 50%, control exists when there is (a) power

9、over more than 50% of the voting rights by virtue of an agreement with other investors; (b) power to govern the financial and operating policies of the enterprise under a statute or an agreement; (c) power to appoint or remove the majority of the members of the board of directors or equivalent gover

10、ning body; or (d) power to cast the majority of votes at meetings of the board of directors or equivalent governing body.,10,Non-controlling interest (Minority interest) that part of the net results of operations and of net assets of a subsidiary attributable to interests which are not owned, direct

11、ly or indirectly through subsidiaries, by the parent.,11,A parent which issues consolidated financial statements should consolidate all subsidiaries, foreign and domestic, except for those /p7-8 Held for sale (IFRS 5) Immaterial The following reasons cannot be permitted for not wanting to consolidat

12、e a subsidiary /p7 Poor performance Poor financial position Differing activities,12,Exemption from Preparation of ConFS,A parent that need not issue consolidated financial statements must meet all of the following conditions: A wholly-owned subsidiary or approved by the owners of NCI if partially-ow

13、ned subsidiary Debt or equity not publicly traded Not in the process of issuing securities in public market The ultimate parent company publishes consolidated financial statements Disclosure required by IAS27 /p6-7,13,Continued,Different/non-conterminous reporting dates adjustments should be made fo

14、r the effects of significant transactions or other events that occur between those dates and the date of the parents financial statements. In any case the difference between reporting dates should be no more than three months.,14,Continued,Accounting policies adjustment Uniform accounting policies s

15、hould be used for like transactions and other events. It may be necessary to bring the subsidiary in line with group policy and appropriate adjustments are made. If it is not practicable, that fact should be disclosed. Pay attention to related parties and transactions among them Parent and subsidiar

16、y are related parties Transactions between parent and subsidiary affect financial statements and their analysis. /p9-10,15,合并方法,Uniting/Pooling of interests method 权益结合法 The assumption is that the combined economic entity is simply a continuation of two previously separate going concerns, which are

17、now under common ownership and operate continuously without substantial change. The book value of both parent and its subsidiaries are combined and carried forward to the consolidated SFP. Forbidden by IFRS,16,Continued,Acquisition method 购并法(previously purchased method), required by IFRS The assump

18、tion is that there is no difference in control obtained, whether by acquiring the subsidiarys common shares or by directly purchasing the net assets of another company. The book value of parent and the fair value of its subsidiaries are combined and carried forward to the consolidated SFP.,17,合并理论,A

19、dopt the entity concept实体理论 Looking at the group as an economic unit rather than through the eyes of the dominant shareholder group (i.e., Proprietary concept所有权理论 ) Full consolidation, not proportionate consolidation (1) Consolidate all assets and liabilities of the subsidiary and present the group

20、s net assets, including the NCI in it (2) Consolidate all profits or losses of the subsidiary and present the group profit or loss, including those attributable to the equity holders of the parent and to the NCI,18,Continued,Worksheets are used in consolidation process. They are an efficient structu

21、re for organizing and adjusting the information used to prepare consolidated statements. They are a part of neither individual companys accounting records nor the resulting consolidated statements. 本课针对考试，主要讲解合并报表各项目的合并数计算方法。抵消调整分录仅仅为辅助手段。,BV,BV,19,CONSOLIDATION PROCESS AT THE ACQUISITION DATE,20,21

22、,Issues, Is subsidiary wholly-owned or partial owned? Which method is used for determining NCI, proportion of net asset method or fair value method? What is goodwill? How is it determined under the above two methods? Is goodwill positive or negative ? What items consist of investment cost? How are i

23、dentifiable net assets of subsidiaries recognized and measured at the acquisition date?,22,Issue ,There is NCI in subsidiary if it is partially owned. NCIs net assets should be presented separately in the section of shareholders equity on the group SFP.合并报表新增NCI项目。 Profit attributable to NCI should

24、be presented separately on the group SCI.,Subsidiary,P%,NCI%,23,Issue,Two methods for determining NCI Proportion of net asset method = NCIs share of fair value of identifiable net assets of subsidiary at acquisition date = 85000*20% = 17000 Fair value method = Fair value of NCI at acquisition date =

25、 NCIs share of fair value of subsidiary at acquisition date, including identifiable and unidentifiable items = 19000,Example 2, p20,24,Issue,Goodwill An unidentifiable asset representing the extra future economic benefits Excess of the value of a company over the value of its identifiable net assets

26、 合并商誉Goodwill on consolidation at acquisition date Excess of FV of consideration transferred and NCI over subsidiarys identifiable net assets acquired = (Cost of investment + NCI) Identifiable net assets,25,Continued,Proportion of net asset method 只产生母公司商誉 = (Cost of investment + NCI) Identifiable n

27、et assets = (78000+85000*20%) 85000 =10000 = Cost of investment -Parents share of identifiable net assets =78000 85000*80% = 10000,Example 2, p20,26,Continued,Fair value method Gross goodwill = (Cost of investment + NCI) Identifiable net assets = (78000+19000) 85000 =12000 = (Parents share + NCIs sh

28、are) of goodwill = (78000 - 85000*80%) + (19000 85000*20%) = 10000 + 2000 = 12000,27,Issue,(Cost of investment + NCI) Identifiable net assets Positive goodwill exists. It should be recognized as an asset and tested annually for possible impairment. 合并报表新增Goodwill资产项目。,28,Continued,(Cost of investmen

29、t + NCI) Identifiable net assets Negative goodwill exists. In fact, it is a gain on bargain purchase. Resulting from the errors in calculating cost of investment, FV of NCI and FV of identifiable net assets as well as lower negotiation power of investee First review whether errors exist, then It sho

30、uld be recognized as income, thereafter a portion of group retained earnings.,29,Continued,Example 2, p20 假设cost of investment $63000, FV of NCI$16000 Proportion of net asset method =63000 85000*80% = -5000 Fair value method = (63000+16000) 85000 =-6000 其中属于NCI的部分是： =16000 85000*20% = -1000,30,Issue

31、,Investment cost is measured at fair value of consideration transferred to acquire a company. The investment in subsidiary is recorded at cost in the parent companys books. Investment in subsidiary Assets/Liability/Equity 本课程对子公司投资的会计处理是成本法，即无论合并多久，母公司账面上对子公司投资的数额一直是初始成本。 对子公司投资是集团内部交易，在合并SFP中应剔除。,p

32、28,31,Continued,Including Cash paid or fair value of noncash assets given up Fair value of any deferred consideration (in the future period, debit finance cost and credit liability) Fair value of any contingent consideration only if it can be measured reliably Fair value of issued shares (subsequent

33、 change in fair value after 计量期间measurement period一般直接与合并后的事项或合并后的主体变化相关，treated as change in accounting estimate, recognize a gain or a loss according to IAS8, not adjust goodwill.),32,Continued,Not including Professional Fees and similar incremental costs incurred in making the acquisition. Expens

34、e Cash Cost of issuing shares or debt Share premium/Discount or premium on LN Cash,Example 4, p31,33,Issue ,An acquirer should recognize the identifiable assets acquired and liability assumed existing at the acquisition date and the reporting date. Contingent liabilities Should be included in the ne

35、t assets of sub in consolidation process if measured reasonably at the acquisition date, even though they would not normally be included in the subsidiarys books,34,Continued,An acquirer should measure the identifiable assets acquired and liability assumed at their fair values at the acquisition dat

36、e and the reporting date. The fair values reflect their cost to the group. Guidelines in IFRS 3 Marketable securities (i.e. those traded on an active market) should be valued at current market value. Non-marketable securities should be valued at estimated value. Looking at comparable securities of s

37、imilar quoted enterprises may be helpful.,35,Continued,Receivables should be valued at the present value of amounts expected to be received. Discounting is unlikely to be necessary for short-term receivables. Inventories finished goods should be valued at selling prices less the sum of disposal cost

38、s and a reasonable profit allowance work in progress should be valued at ultimate selling prices less the sum of completion costs, disposal costs and a reasonable profit allowance raw materials should be valued at current replacement costs.,36,Continued,Property, plant and equipment should be valued

39、 at market value. Intangible assets per IAS 38 Payables should be valued at the present value of amounts expected to be paid. As with receivables, discounting will not be necessary for short-term payables. There is a 12 month window to make fair value adjustments to the assets, liabilities and there

40、fore goodwill. After this 12 month period, changes may only be made if errors occurred in accordance with IAS 8.,37,Continued,集团资产和负债的合并数 =BV(P) + FV(S) =BV(P) + BV(S) +/- FV adjustments (S) The following items are post-acquisition items, not affecting fair values at the acquisition date. Changes re

41、sulting from the acquirers intentions or future actions. Changes resulting from post-acquisition events. Provisions for future operating losses or reorganisation costs incurred as a result of the acquisition.,38,合并日Group SFP,39,Continued,+APA：子公司按母公司会计政策调整 p35，会影响相关资产、负债以及NCI，合并日后报表也可能涉及。 为了计算合并日Goo

42、dwill和NCI，需要计算合并日FV of identifiable net assets of Sub. = Net assets BV(S) +/- FVA +/-APA,40,Example 1 ($000), p16,Acq. date 31 Decx4 Rep. date 31 Decx4 P%=100% FV of Net assets at acq. Date=40+10=50,41,CONSOLIDATION PROCESS AFTER THE ACQUISITION DATE,42,子公司净资产,对子公司的投资+NCI 初始投资 账面价值 公允价差 商誉 投资后变动 损益

43、摊销 减值 内部逆销交易 股利 未实现损益 其他变动 抵消 报告日 账面价值 公允价差 商誉 是投资后子公司的留存收益变动。,43,Continued,Consolidation process after acquisition date should include the effect of post-acquisition transactions and events of subsidiaries on group assets, liability , revaluation reserve and retained earnings. Post-acquisition rese

44、rve (RR+RE) of subsidiary: BV Changes in FV adjustment Impairment on positive goodwill Intra-group transactions,44,Continued,P%,NCI%,Changes in net assets of sub,45,合并日后Group SFP,46,Consolidated SFPParent and a subsidiary,47,Step 1 Establish the group structure,48,Step 2 Net assets of subsidiary,49,

45、Example 3 ($000), p23,Acq. date 1yr ago Rep. date 31 Decx9 P%=100% Proportion of net asset method FV of Net assets at acq. date= 4+ 6 + 2= 12 FV of Net assets at rep. date= 4 + 6 + 9= 19 Goodwill = 27 12*100% = 15 NCI= 19*0% = 0 Group RE = 40 + 100%*(19-12) = 47,51,Test 1 ($000), p26,Acq. date 1 Jan

46、, x1 Rep. date 31 Dec, x1 P%=80% NCI%=20% Proportion of net asset method FV of Net assets at acq. date= 100+15= 115 FV of Net assets at rep. date= 100+20= 120 Goodwill = 110 115*80% = 18 NCI= 120*20% = 24 Group RE = 120 + 80%*(120-115) = 124,53,Test 2 ($000), p27,Acq. date 1 Jan, x8 Rep. date 31 Dec

47、, x8 P%=80% NCI%=20% Fair value method FV of Net assets at acq. date= 20+10+20= 50 FV of Net assets at rep. date= 20+10+25= 55 Goodwill = (60+12.5) 50 = 22.5 NCI= 55*20% + (12.5 50*20%) = 11+ 2.5 = 13.5 Group RE = 70 + 80%*(55-50) = 74,55,Test 3 ($), p32,Acq. date 1 July, x7 Rep. date 30 June, x8 P%

48、=60% NCI%=40% Fair value method FV of Net assets at acq. date= 5000+5800= 10800 FV of Net assets at rep. date= 5000+7200= 12200,56,Continued,issue 1200 shares Cost of investment = $5000 + 5000*60%*(2/5) *$1.8 +$ 2000/1.063 = 5000 + 2160 + 1680 = 8840 Goodwill = (8840+5750) 10800 = 3790 NCI= 12200*40

49、% + (5750 10800*40%) = 4880+ 1430= 6310 Group RE = 12500 -101 + 60%*(12200-10800) = 13239,58,Test 4 ($000), p33,Acq. date 2 yrs ago Rep. date 31 Dec, x4 P%=80% NCI%=20% Fair value method Excess over BV Brand/S Acq. date 250 10yrs Rep. date 250-250/10*2=200 PPE/S Acq. date 200 5yrs Rep. date 200-200/

50、5*2=120 FV of Net assets at acq. Date = 500+125 + 200 +250= 1075 FV of Net assets at rep. date = 500+ 300 + 120+ 200 = 1120,59,Continued,Cost of investment = $1000 + 200*$1.8 +$ 500*0.751 = 1000 + 360 + 376 = 1736 Goodwill = (1736+380) 1075 - 258 = 783 NCI= 1120*20% + (380 1075*20%) 258*20%= 224+ 11

51、3= 337 Group RE = 1400 -38 + 80%*(1120-1075) 258*80%= 1192,61,Intra-group transactions,Intra-group transactions are related party transactions whether they are at arms length or not, including Sales and purchases of inventory/non-current assets Loan notes/loan interest Dividends from subsidiary Prov

52、ision of services Guarantees for loans and overdrafts, etc. Intra-group transactions should be eliminated to avoid overstating assets/liabilities and income/expense of the group,62,Current accounts,Elimination entry Due to cash/inventory in transit, receivable of one company may be larger than payab

53、le of the other company,63,Continued,Loan notes issued by P or S Held by P or S: cancelled between P and S Held by outsiders: non-current liabilities on the SFP Loan interest Payable to group members: cancelled each other Payable to outsiders: current liabilities Dividends unpaid from subsidiary pay

54、able to group members: cancelled each other payable to NCI: current liabilities,64,Example5 ($000), p36,Acq. date X1 Rep. date 31 Mar, x7 P%=80% NCI%=20% Proportion of net asset method FV of Net assets at acq. date= 100+30+5= 135 FV of Net assets at rep. date= 100+30+20= 150 Goodwill = 180 135*80% =

55、 72 NCI= 150*20% = 30 Group RE = 40 + 80%*(150-135) = 52,66,Test5 ($), p40,Acq. date 1 July, X5 Rep. date 30 June, x8 P%=75% NCI%=25% Fair value method Excess over BV Land/S Acq. date , Rep. date 1250 Plant/S Acq. date 500 5yrs Rep. date 500-500/5*3=200 FV of Net assets at acq. Date = 1000 +1150 +1250 + 500 = 3900 FV of Net assets at rep. date = 1000 + 3150 +1250 + 200 = 56