Sbr practice
JOCATT
1} Acquisition of tigret
Jocatte obtained control in stages known as step acquisition on June 30 20x2 jocatt should have
brought its original investment at fair value for calculation of goodwill goodwill should be increased
by $5m , gain on investment $1M should be recorded in p and l account .
The tax base of identifiable net assets was $35M which exceeded the netassets by $10M , This
created a temporary difference of $3M ( 45-35 *30% ) This should also be taken to goodwill
calculation .
Goodwill is calculated as follows: $M
Fair value of consideration paid ($!5+$15) 30
Fv of previous investment 5
Fv of non controlling interest 20
Less fair value of net assets at aqusistion -45
Deffered tax 3
Goodwill at aqusision 13
PARSLEY
Acquisition of sage should be treated as step acquisition and from jan 31 It should be treated as a
subsidiary of the group as it has acquired control over the subsidiary by purchasing more than 50
5 of the shares . up to this date parsley has a significant influence over the firm and would account it
using EQUITY METHORD and a share of profit of associates sis recorded in the group p and l
statement till the associate became an subsidiary of parsley ie (6*9/12)
Ca of investment in sage
=2.5+8*.3
4.9
A gain of 1.6 should be recorded in pand l cacc sage profit for the year for the last 3 months should
be allocated to the group and the subsidiary
Saffron ifrs 3 BUSINESS CONBINATIONS srares that net assets of subsidiary should be accounted
using fair values its brand miust be brought at fair value
Fv of the brand was 10 M and should be amortised over it s usefull life
The rates should be translated using average rate and should be distributed btw ownet and
subsidiary
AGENCY groups
MR M has taken unfair advantage of current employment conditions of MR R as he is unable to find
a job elsewhere and using this opportunity MR M has not prepared an employment contract with is
Breaches values of professional behaviour and integrity and MR M should prepare an employment
contract even if the employment is on an temporary basis.
MR M has delegated preparation of financial statements to MR R who has no experience as he is a
student and might not possess complete knowledge of preparation of financial statements and could
end up making mistakes which might affect the financial decisions of the financial statement users if
they are not checked thoroughly for any errors . MR M should delegate to any person who has
professional competence .
MR M has included Re translation gain in p and l account instead of oci while disposal which inflates
the profits of the firm and affects the financial decisions of the financial statement users and despite
finding the error MR M has not rectified the error which Violates INTEGRITY AND PROFESSIONAL
DUE CARE for not rectifying the mistake
MR M should consider his position in the firm and shoul
BOHAI
IAS IMPAIRMENT of assets states that the a company when measuring assts at fair value should look
for internal and external indicators of impairment , External indicators of impairment includes the
current market conditions and if the recoverable amount is less the assets need to be impaired to
their recoverable amount .
B:
IAS 12 income taxes states that a firm can claim deferred tatax against future profits if sufficient
evidence for future profits exists in the upcoming future periods , company needs to do tax planning
in order to claim any deferred tax asset on its future profits .
Bhai co has recognised a 5m asset in the p and l ac which is not in accordance with the standard as
bohi co if DTA should be recognised in the SOFP regard
Sus report
Sustaniability report is is important as it provides crutial nonfinancial information to the users apart
from the usual statements that the company produces annually. Sustainability reorting keeps the
users of the financial statements informed about the companies effects on the environment due to
its daily operations which helps the users of the financial statements take important decisions about
the companies future .
