Ch 12: Consolidation
1. Lectures
1-1 Introduction to Consolidation and Control [O]
1-2 Procedures and Rules [R]
1-3 Exams' Perspective (How to solve questions?) [I]
2. Comprehensive Examples
2-1 Q&A Alpha Limited (ICAP Autumn 2014) [O]
2-2 Q&A Galaxy Limited (ICAP Autumn 2015) [O]
2-3 Q&A Yasir Limited (ICAP Autumn 2016) [R]
Query: Sir ye loan wali adjustment as a lease transaction treat nahi hogi? Annuity ka formula lagae 4 million ki 5 monthly installments give PV of 14.42 aur second year ka interest 2.54 M ban raha? Please explain
Response: No. We must not assume it to be lease transaction without any indication. It is simply a loan that will be paid in installments. And installment of Rs. 4 million does not include interest, so it would not result in correct present value.
2-4 Q&A Golden Limited (ICAP Spring 2017) [R]
Query: Sir in adjustment 1, Apne 11 Q liya or 25 Q nhi??
Response: We used Rs. 11 per share for calculation of NCI as NCI relates to subsidiary. Therefore, subsidiary's share value is relevant (not parent's). Also Rs. 25 was incorrectly mentioned in this question and was corrected in ICAP study text (Chapter 12 Page 652 / Example 65) subsequently.
2-5 Q&A Jasmine Limited (ICAP Spring 2018) [I]
Query: In Arrow Limited there is adjustment of unrecorded dividend but no adjustment of dividend was made in Jasmine Limited?
Response: In Arrow Limited, see last line of working 2 (separately shown because it is unrecorded, so retained earnings do not include it):
-Unrecorded dividend [0.5 x 160m shares] - (80)(80)
In Jasmine Limited, already correctly recorded (information vii), therefore, retained earnings includes its effect already.
2-6 Q&A Rivera Limited (ICAP Spring 2015) [O]
2-7 Q&A Oscar Limited (ICAP Spring 2016) [I]
2-8 Q&A Present Limited (ICAP Autumn 2017) [R]
Query: sir agar acquisition say phly inter group company transaction hoi ho or phir acquisition k baad year end jo aye ga tab b kuch stock in hand ho to kya us ki b adjustment karen gy??
Response: Because such transactions are not consolidated, adjustment for elimination of effect of these transactions is also not required.
2-9 Q&A Arrow Limited (ICAP Spring 2019) [R]
Query: Sir Parent gave the shares as the consideration, so shouldn't the amount of share capital increase in SOFP? Since the entry goes like. Dr. Investment Cr. Share capital
Response: Yes your proposed entry is correct but there is no need to take extra effects of this entry because investment (and effect in share capital) is already recorded in the data given in the question (information (i) is just given to separate the investment in subsidiary from other investments).
Query: Sir second adjustment mein yehe assume kiya ha ke impairment date of acquisition pe book ki ha parent aur subcidary ne
Response: There is no impairment because recoverable amount is higher than carrying amount. This is fair value adjustment and that is done at the date of acquisition as mentioned in the video.
Query: In Arrow Limited there is adjustment of unrecorded dividend but no adjustment of dividend was made in Jasmine Limited?
Response: In Arrow Limited, see last line of working 2 (separately shown because it is unrecorded, so retained earnings do not include it):
-Unrecorded dividend [0.5 x 160m shares] - (80)(80)
In Jasmine Limited, already correctly recorded (information vii), therefore, retained earnings includes its effect already.
3. Objective Based Q&A
3-1 MCQs [1 to 20] - Set 1 [O]
3-2 MCQs [1 to 20] - Set 2 [O]
Query: In MCQ number 5. There are two amounts in front of Profit for the year ended 31st March 2015 and those two amounts are 40 and 120. So as you said in the question 40 is the profit at year end then what is 120? representing
Response: 80 is opening balance of retained earnings. 40 is profit for the year. 120 is total i.e. closing balance of retained earnings.