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level: Group Accounts

Questions and Answers List

level questions: Group Accounts

QuestionAnswer
When are final dividends accounted for?They will be recorded in the FS only when they were declared before the year end. Otherwise, they will be disclosed in the notes.
What is "control" in terms of group accounts?The power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
What is "significant influence" in terms of group accounts?The power to participate in the financial and operating policy decisions of an entity, but not to control these policies.
What is an associate?An entity over which the investor has significant influence.
What is Significant Influence?The power for participate in the financial and operating policy decisions of the investee but is not control of joint control over those policies.
What sized share holdings are significant?20% to 50%.
What is Equity Accounting ?"A method of accounting whereby the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor's share of net assets of the associate."
Using Equity accounting how are assets and liabilities treated?A single investments in associates line in the non-current assets section of the SFP. These are the group share of the assets and liabilities of the associates.
What is required before equity accounting may be used?Consolidated statements must have already been produced (ie. there must already be at least one subsidiary).
Using Equity accounting, how are the expenses and income treated?A single share of profit of associates line in the SPL, which is the groups share of of any of the associate's profit after tax.
How is the investment in the associate calculated for the SFP?Cost of Investment + Share of post-acquisition profits - Impairment losses - group share of PURP
How is an associate treated if there are no subsidiaries?It will be treated as a trade investment and shown as a non-current asset because there are no consolidated statements to add it to.