Entries for fair value adjustments to consolidate

[DanSal]

Hi all

When purchasing a subsidiary the net assets are included at fair value to calculate goodwill

Suppose we need to include

1- fair value of PPE
2- contingent liabilities
3- client lists

Which entries are done at consolidation

1- debit ppe of Sub, credit revaluation reserve?
2- credit liabilities of sub and debit group p&l?
3- sabes as 1?

My doubt is which are the entries to record those adjustments at group level

Thanks
Dan

[Ketan Marwah]

Hi Dan,

This is more a general accounting query than an IFRS topic. You are basically querying to regurgitate the entire standard (IFRS 10) in a community post. I recommend you invest time in reading the standard to not be misguided by a brief response from anyone as there are many things to consider in the consolidation procedure. I am quite sure you would find the response yourself upon reading the standard but in case you have any specific queries then obviously one or the other person from the community would help you with your specific queries.

[JRSB]

I think the point DanSal is that it's not really individual journals for each item, it's one consolidation journal which goodwill is effectively the balancing figure. I think looking at a worked example would be handy.

The acquisition adjustments will be only at group level, the fact of being acquired has no direct impact on the subsidiary's own accounting.

[Ketan Marwah]

I was not taking about individual journal entries but the consolidation journal upon acquisition of a subsidiary which could include a whole gamut of items such as the fair value adjustments, NCI adjustment etc. so I would refrain from dishing out guidance for IFRS 3 and 10 combined over community posts but maybe you are more patient than I am

[DanSal]

Ok thank you

I was not asking about goodwill specifically - I was just asking if accounting journals (and those 3 specifically) are done at consolidation to bring the net of the subsidiary to fair value

Normally when I read the standard or books it just says to “include net assets at fair value” but to do this in the consolidation I think there are journals that need to be enter

Thanks anyways

[Marek Muc]

It'll depend on the consolidation software in use. For instance, when a new subsidiary completes a consolidation package, consolidation software will automatically integrate this data into the consolidation process, eliminating the need for manual recognition of the subsidiary's net assets (at least at their original book values). There isn't a universal solution for this.
PS. I've moved this topic to the general discussion forum. Please post similar queries there in the future, thanks!

[DanSal]

Ok thanks - apologies for using the incorrect forum