SLS 3 - 1 Compare and contrast the provisions of the...

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Compare and contrast the provisions of the Singapore FRS related to consolidated financial statements with the requirements of the “entity theory” of consolidation. 2
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3 CURRENT FRS ENTITY THEORY Preparation of financial statements Prepared from perspective of parent’s shareholders Prepared from perspective of all shareholders of entire group Assets & Liabilities All assets and liabilities of the subsidiary added to parent’s in CBS at BV, add parent’s proportionate share of excess of FV over BV All assets and liabilities of the subsidiary added to parent’s in CBS at FV Revenues & Expenses All revenue and expenses of the subsidiary added to parent’s in CSCI.
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4 CURRENT FRS ENTITY THEORY Recognition of NCI CBS Presented as a separate component of S/H equity CSCI Presented the same way as Parent; Attributable to CBS ‘Shareholders’ equity’ CSCI Presented as a distribution of profit Measurement of NCI CBS Measured based on ‘acquisition date FVINA’ or ‘FV’ CSCI Balance of amount attributable to NCI CBS Measured based on share of post-acquisition FV of subsidiary’s net assets CSCI Measured based on share of subsidiary’s adjusted PAT
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5 CURRENT FRS ENTITY THEORY Goodwill Only Parent Depending on measurement based used to calculate NCI (1) Fair value at acquisition date: NCI’s portion of good will = Fair value – NCI% on FV of identifiable net assets (2) Share of acquisition date fair value of identifiable net assets of subsidiary: Treats GW belonging to NCI as 0 Parent & NCI Treatment of Unrealized P/L Upstream Full proportionate (group’s profit adjusted for Parent’s share only) Upstream Eliminated in full Downstream Eliminated in full
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What is the nature of NCI? How should it be measured and presented in the Consolidated Balance Sheet? Discuss the above in the context of consolidation theories and in relation to the provision of the relevant Singapore FRSs. 6
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7 A portion of equity interest in subsidiary that is not attributable to the parent.
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Nature 8 Views the business entity as an extension of its proprietor Measurement NONE; Parent’s B/S will consist of parent’s proportionate share of assets, liabilities, revenues, and expenses in the CBS and CSCI Presentation NONE; Parent’s B/S will consist of parent’s proportionate share of assets, liabilities, revenues, and expenses in the CBS and CSCI
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Nature 9 Views that CFS are an extension of the parent’s account; Should be prepared from the viewpoint of the shareholders of parent Measurement Measured based on NCI’s share of the pre -acqbook value of the net identifiable assets of the subsidiary Presentation ‘LIABILITY’ in CBS
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