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The year end of the parent co is 31 December and on that date acquired 100% of a company. How to consolidate the revenue and financial  position in the books of parent compnay.
in IFRS 10 - Consolidated Financial Statements by Level 1 Member (1.1k points)

2 Answers

0 votes
At date of Acquisition, the parent company will account for subsidiary as follows:

i) Consideration paid by parent company will be compared with the Fair value of net assets of the subsidiary at acquisition date. If :

  a)  Consideration paid is greater than FV of net assets, the difference will be recognized by parent company as goodwill in non-current assets in balance sheet

  b) Considetation paid is less than FV of net assets, the difference will be recognized by parent company as bargain purchase gain in profit and loss statement as income

Since subsidiary is acquired on report, therefore no line by line addition of revenue will be made.

All assets and liabilities of subsidiary will be added in assets and liabilities of parent company (except inter group receivables, these balances will be canceled)
by Level 1 Member (2.3k points)
0 votes

Since the Parent acquired (and obtained control of) the investee at year-end, the investee's net profit or loss for the year (ending at the acquisition date) shall constitute part of the investee's net assets acquired at that date. Thus, the investee's pre-acquisition revenues, gains, expenses and losses during that year shall not appear in the parent's consolidated statement of profit or loss and other comprehensive income at year-end (which coincides, in your case, with the acquisition date).

As of the acquisition date (in your case, year-end), Parent shall recognize, separately from goodwill, the identifiable assets acquired, the liabilities assumed and contingent liabilities (meeting the criteria to be recognized in accordance with the IFRS Conceptual Framework for Financial Reporting) at their acquisition-date fair values. Also in case of less than 100% acquisitions, Non-controlling Interests (NCI or, previously termed, minority interest) shall be recognized at their acquisition-date fair value (unless certain conditions are satisfied, in which case, Parent shall have an accounting policy choice at acquisition date to measure NCI either at their acquisition-date fair value or at their proportionate share in fair value of the recognized amounts of the investee's identifiable net assets).

Parent shall measure cost of business combination (i.e. consideration transferred in a business combination) at fair value which is calculated as the sum of the following amounts: (1) fair value of assets (e.g. cash/other assets/business of the Parent/contingent consideration/options/warrants etc.) transferred by Parent to, (2) fair value of liabilities incurred by Parent to, and (3) fair value of equity instruments issued by Parent to former owners of the investee. 

Goodwill will arise in a business combination if the sum of the consideration calculated above plus (4) any NCI recognized and (5) fair value of any interest the Parent previously had in the investee prior to obtaining control of the investee exceeds the acquisition-date fair value of the investee's net assets recognized. Goodwill shall be recognized initially by Parent at cost (the excess amount calculated above) and subsequently be tested for impairment. However, if the acquisition-date fair value of the investee's net assets recognized exceeds the sum of 5 amounts, a bargain gain will arise from acquisition and shall be recognized in consolidated profit or loss of Parent during the period in which the investee has been acquired.

Acquisition-related costs that the Parent incurs to effect the business combination (such as finder fees, advisory, legal, accounting, valuation and other professional or consulting fees etc.) are recognized by Parent as expenses in consolidated profit or loss in the periods in which the costs are incurred and the services are received (except where they are incurred to issue debt or equity securities, in which case, they are recognized, respectively, as part of the initial carrying amount of the debt or equity issued, in accordance with the requirements of IAS 39 Financial Instruments: Recognition and Measurement (or, when applicable,  IFRS 9 Financial Instruments) or
IAS 32 Financial Instruments: Presentation.