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Key Concepts of Consolidation
Key Concepts of Consolidation
Key Concepts of Consolidation
Considerations Goodwill
transferred
A group Non-controlling interest
Net asset of Basic principles
subsidiary
Fair value Group’s retained
earnings
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Considerations
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A group: One enterprise (the parent) controls,
either directly or indirectly another enterprise
(the subsidiary). A group consists of a parent
and its subsidiaries
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Fair value:
The price that would be received to sell an asset
or paid to transfer a liability in an orderly
transaction between market participants at the
measurement date
Fair value of net assets of subsidiary at the date of
acquisition: identifiable assets and liabilities of
subsidiary in acquisition are measured at
acquisition-date fair value
Fair value of net assets of subsidiary= Book value
of equity of subsidiary (net book value of
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subsidiary)+ Fair value adjustment on acquisition
(2) Goodwill ( of NCI)= Fair value of NCI at the
date of acquisition- (% share of non-controlling
shareholders in subsidiary x Fair value of net
assets of subsidiary)
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Basic principles