13. Group Accounts: Basic Principles

Question 1

One C buying another DE

Answer 1

DR Investment
CR Cash

Question 2

One C being bought by another DE

Answer 2

None

Only between the buyer and prev owner

Question 3

Four basic steps to consolidate P&L?

Answer 3

1. Consolidate assets & liabilities
   Except investments in S by P
2. Include only P’s capital & share premium (in equity)
3. Consolidate all of P’s retained earnings
   BUT
   Only consolidate P’s share of S’s retained earnings since acquisition
4. (If P doesn’t own all of S)
   Then reflect in equity that the NCI controls a share of the net assets being consolidated