DFS Consolidated Balance Sheet

greide

Please could somebody help me to understand the calculations needed when preparing a consolidated balance sheet?

Our tutor goes through everything far too quickly in class and I am really, really struggling with just about everything DFS related!!!

I am trying to figure out how the percentage of the subsidary to be purchased is calculated and also where the "change" figure comes from in the retained earnings.

Any help on this and any general tip would be greatly appreciated as I am really in a panic about DFS.

Gem

Jordanator

Hi Gem,

I'm just getting my head around DFS too!

You work out the percentage the parent has bought of the subsiduary by using the share capital figure of the subsiduary and the invested amount from the parent.

eg - If the share capital of the Subsiduary is £2,000,000, and the parent invested £1,200,000 then the parent owns 60% of the subsiduary in my understnading.

(working=100/2000000x1200000=60)

Not sure which figure you mean by the change figure - my tutor may have used different terms than yours.

Hope that helps anyway

greide

Hi thanks for your help,

Our tutor has a theory of only teaching his own methods and not those set out in the learning materials so it does become difficult if you are stuck and he is off sick or unavailable!

Hopefully it will return to my memory soon enough!

:-)

greide

I am still stuck on this subject!!!

I left it for a few days in the hope that I would calm down and be able to focus on it again but I just panic more every time I look at it!

I can't even begin to answer the questions as I just don't know where to start.

My college notes just don't seem to make any sense at all.

Anymore guidance will be greatly appreciated!

Gem

ryansmith

1)ownership %

2)Goodwill
(share capital + share preimum + retained earning(last year) + fair value adjust ) X Ownership% - Investment Paid = Goodwill - Impairment = Balance Sheet value of Intanible non-current asset

3)Inter company adjustment

4)Post aquisition Profit
Retained Earning(this year) - Retained Earning(last year) X ownership + parent retained earning - Impairment= retained earning for group

5) Non crolling interest
Balance Sheet fair value adjust + Post acqusition Profit X (100-ownership)%

greide

Thanks very much for this, it will be so helpful to me.

One more thing though, I cannot get to the point where I have the percentage purchased. I have tried the formula above but it doesn't seem to work?

Do you have a formula for this?

Thanks

Steve Collings

If the subsidiary has issued share capital in their statement of financial position of 12,000 $1 shares so $12,000 and the subsidiary has acquired 9,000 of these then the parent will own:

(9,000 / 12,000) x 100 = 75%.

Control is obtained because the parent owns more than 50% so you would consolidate in accordance with IAS 27 provisions.

Regards

Steve

Sally

I have finally learnt the method and can prepare consolidated balance sheets but am confused as to why the non current assets for parent and subsidiary are totalled if there is a minority interest. I'm fighting the urge to apportion the non current assets of subsidiary between the parent and minority interest. Am i missing something basic?

Steve Collings

Hi Sally,

Try to view the consolidation process from the parent company concept.

The parent company concept requires 100% consolidation of all 'controlled' subsidiaries (ie where you have more than 50% of the voting rights), even if the parent has less than 100% of the shares in the subsidiary company so you still consolidate 100% line by line including non-current assets. Therefore:

Net assets = 100% of parent and 100% of sub
Retained earnings = 100% of parent plus group's share of post-acquisition retained earnings of sub
Non controlling interests = share of the net assets of sub owned by outside investors

This concept does recognise that the parent company's interests is limited to its shareholding in the subsidiary which is why you recognise non controlling interests within the equity section of the statement of financial position.

Regards
Steve

Sally

Hi Steve

Thanks so much for your post. It makes perfect sense now.