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ACCA F7
Financial Reporting (FR) - Consolidated
Statement - Consideration Practice
财务报告 -合并报表 – 购买成本习题
ACCA Lecturer: Jeff Yu
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1
2
3
Introduction
Accounting Treatment
Practice
F7 Consolidated Statements Chapter 3 Contents
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Introduction
年份 题型
08/06 Shares + Deferred payment
08/12 Shares
09/06 Shares + Loan note + Cash
09/12 Shares
10/06 Shares + Contingent consideration
10/12 Shares + Loan note
11/06 Shares
11/12 Cash + Deferred payment
12/06 Shares + Deferred payment
12/12 Shares + Deferred payment
13/06 Shares + Loan note
13/12 Cash + Contingent consideration
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Introduction
年份 题型
14/06 Shares + Deferred payment
14/12 Shares + Deferred payment
15/06 Shares + Deferred payment
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Accounting Treatment
Cash
Dr. Investment
Cr. Cash
Investment ↑
Cash ↓
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Accounting Treatment
Share
Dr. Investment
Cr. Share capital
Share premium
Examples: (08/12)(09/12)(11/06)
Investment ↑
Share capital ↑
Share premium ↑
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(08/12)
On 1 April 2008, Pedantic acquired 60% of the equity share
capital of Sophistic in a share exchange of two shares in
Pedantic for three shares in Sophistic. The issue of
shares has not yet been recorded by Pedantic. At the date
of acquisition shares in Pedantic had a market value of $6
each.
Dr. Investment (4000 × 60% × 2/3 × $6) 9,600
Cr. Share capital (4000 × 60% × 2/3 × $1) 1,600
Share premium 8,000
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(09/12)
On 1 April 2009 Pandar purchased 80% of the equity shares
in Salva. The acquisition was through a share exchange
of three shares in Pandar for every five shares in Salva.
The market prices of Pandar’s and Salva’s shares at 1 April
2009 were $6 per share and $3.20 respectively.
Dr. Investment (120m × 80% × 3/5 × $6) 345,600
Cr. Share capital (120m × 80% × 3/5 × $1) 57,600
Share premium 288,000
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(11/06)
On 1 October 2010 Prodigal purchased 75% of the equity
shares in Sentinel. The acquisition was through a share
exchange of two shares in Prodigal for every three
shares in Sentinel. The stock market price of Prodigal’s
shares at 1 October 2010 was $4 per share.
Dr. Investment (160,000 × 75% × 2/3 × $4) 320m
Cr. Share capital (160,000 × 75% × 2/3 × $1) 80m
Share premium 240m
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Accounting Treatment
Loan note
Dr. Investment
Cr. Loan note
Examples: (09/06)(10/12)(13/06)
Investment ↑ Loan note ↑
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(09/06)
(i) Investment in Syclop
On 1 April 2007 Pacemaker acquired 116 million shares in
Syclop for an immediate cash payment of $210 million
and issued at par one 10% $100 loan note for every 200
shares acquired.
Dr. Investment 268m
Cr. Cash 210m
Loan note (116/200 × $100) 58m
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(10/12)
On 1 June 2010, Premier acquired 80% of the equity share
capital of Sanford. The consideration consisted of two
elements: a share exchange of three shares in Premier
for every five acquired shares in Sanford and the issue of
a $100 6% loan note for every 500 shares acquired in
Sanford. The share issue has not yet been recorded by
Premier, but the issue of the loan notes has been recorded.
At the date of acquisition shares in Premier had a market
value of $5 each and the shares of Sanford had a stock
market price of $3.50 each.
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(10/12)
Dr. Investment 12,800
Cr. Share capital (5,000×80%×3/5×$1) 2,400
Share premium (5,000×80%×3/5×$4) 9,600
Loan note (5,000×80%×100/500) 800
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(13/06)
On 1 October 2012, Paradigm acquired 75% of Strata’s
equity shares by means of a share exchange of two new
shares in Paradigm for every five acquired shares in
Strata. In addition, Paradigm issued to the shareholders of
Strata a $100, 10% loan note for every 1,000 shares it
acquired in Strata. Paradigm has not recorded any of the
purchase consideration, although it does have other 10%
loan notes already in issue. The market value of Paradigm’s
shares at 1 October 2012 was $2 each.
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(13/06)
Dr. Investment 13,500
Cr. Share capital (20,000×75%×2/5×$1) 6,000
Share premium (20,000×75%×2/5×$1) 6,000
Loan note (15,000×100/1,000) 1,500
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Accounting Treatment
Deferred cash
Dr. Investment
Cr. Deferred cash
Dr. Finance cost
Cr. Deferred cash
1. Discount 折现 2. Unwinding (注意时间段,可能<一年)
Examples:
(08/06)(11/12)(12/06)(12/12)(14/06)(14/12)(15/06)
Investment ↑ Deferred cash↑
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(08/06)
On 1 August 2007 Patronic purchased 18 million of a total of
24 million equity shares in Sardonic. The acquisition was
through a share exchange of two shares in Patronic for
every three shares in Sardonic. Both companies have
shares with a par value of $1 each. The market price of
Patronic’s shares at 1 August 2007 was $5.75 per share.
Patronic will also pay in cash on 31 July 2009 (two years
after acquisition) $2.42 per acquired share of Sardonic.
Patronic’s cost of capital is 10% per annum.
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(08/06)
Dr. Investment 105,000
Cr. Share capital (18,000×2/3×$1) 12,000
Share premium (18,000×2/3×$4.75) 57,000
Deferred cash (18,000×2.42/1.21) 36,000
Note: $1 compounded for two years at 10% would be
worth $1·21.
Dr. Finance cost (36,000×10%×8/12) 2,400
Cr. Deferred cash 2,400
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(11/12)
On 1 October 2010, Paladin secured a majority equity
shareholding in Saracen on the following terms:
an immediate payment of $4 per share on 1 October 2010;
and a further amount deferred until 1 October 2011 of
$5.4 million. The immediate payment has been recorded in
Paladin’s financial statements, but the deferred payment has
not been recorded. Paladin’s cost of capital is 8% per
annum.
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(11/12)
Dr. Investment 37,000
Cr. Cash 32,000
Deferred consideration (5,400×1/1.08) 5,000
Dr. Finance cost (5,000×8%) 400
Cr. Deferred cash 400
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(12/06)
On 1 April 2011, Pyramid acquired 80% of Square’s equity
shares by means of an immediate share exchange and
a cash payment of 88 cents per acquired share, deferred
until 1 April 2012. Pyramid has recorded the share
exchange, but not the cash consideration. Pyramid’s cost of
capital is 10% per annum.
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(12/06)
Dr. Investment 30,400
Cr. Shares 24,000
Deferred consideration (10,000×80%×0.88/1.1) 6,400
Dr. Finance cost (6,400×10%) 640
Cr. Deferred cash 640
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(12/12)
On 1 January 2012, Viagem acquired 90% of the equity
share capital of Greca in a share exchange in which
Viagem issued two new shares for every three shares it
acquired in Greca. Additionally, on 31 December 2012,
Viagem will pay the shareholders of Greca $1.76 per share
acquired. Viagem’s cost of capital is 10% per annum.
At the date of acquisition, shares in Viagem and Greca had
a stock market value of $6·50 and $2·50 each, respectively.
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(12/12)
Dr. Investment 39,000
Cr. Share capital (10,000×90%×2/3×$1) 6,000
Share capital (10,000×90%×2/3×$5.5) 33,000
Deferred consideration (9,000×$1.76/1.1) 14,400
Dr. Finance cost (14,400×10%×9/12) 1,080
Cr. Deferred cash 1,080
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(14/06)
On 1 October 2013, Penketh acquired 90 million of Sphere’s
150 million $1 equity shares. The acquisition was achieved
through a share exchange of one share in Penketh for
every three shares in Sphere. At that date the stock
market prices of Penketh’s and Sphere’s shares were $4
and $2·50 per share respectively. Additionally, Penketh will
pay $1·54 cash on 30 September 2014 for each share
acquired. Penketh’s finance cost is 10% per annum.
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(14/06)
Dr. Investment 246,000
Cr. Share capital (90,000×1/3×$1) 30,000
Share capital (90,000×1/3×$3) 90,000
Deferred consideration (90,000×$1.54/1.1) 126,000
Dr. Finance cost (126,000×10%×6/12) 6,300
Cr. Deferred cash 6,300
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(14/12)
On 1 January 2014, Plastik acquired 80% of the equity
share capital of Subtrak. The consideration was satisfied by
a share exchange of two shares in Plastik for every
three acquired shares in Subtrak. At the date of
acquisition, shares in Plastik and Subtrak had a market
value of $3 and $2·50 each respectively. Plastik will also
pay cash consideration of 27.5 cents on 1 January 2015
for each acquired share in Subtrak. Plastik has a cost of
capital of 10% per annum.
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(14/12)
Dr. Investment 162,000
Cr. Share capital (9,000 x 80% x 2/3 x $1) 4,800
Share capital (9,000 x 80% x 2/3 x $2) 9,600
Deferred consideration
(9,000 x 80% x 27·5 cents x 1/1·1) 1,800
Dr. Finance cost (1,800 x 10% x 9/12) 135
Cr. Deferred cash 135
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(15/06)
On 1 July 2014 Bycomb acquired 80% of Cyclip’s equity
shares on the following terms:
– a share exchange of two shares in Bycomb for every
three shares acquired in Cyclip; and
– a cash payment due on 30 June 2015 of $1·54 per
share acquired (Bycomb’s cost of capital is 10% per annum).
At the date of acquisition, shares in Bycomb and Cyclip had
a stock market value of $3·00 and $2·50 each respectively.
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(15/06)
Dr. Investment 32,640
Cr. Share capital (12,000 x 80% x 2/3 x $1) 6,400
Share capital (12,000 x 80% x 2/3 x $2) 12,800
Deferred consideration
(12,000 x 80% x $1.54/1.1) 13,440
Dr. Finance cost (13,440 x 10% x 9/12) 1,008
Cr. Deferred cash 1,008
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Accounting Treatment
Contingent consideration
Dr. Investment
Cr. Contingent consideration
Dr. Contingent consideration
Cr. Decrease in contingent consideration
Examples:
(10/06)(13/12)
Investment ↑ Contingent
consideration↑
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(10/06)
On 1 April 2009 Picant acquired 75% of Sander’s equity shares in
a share exchange of three shares in Picant for every two
shares in Sander. The market prices of Picant’s and Sander’s
shares at the date of acquisition were $3.20 and $4.50
respectively. In addition to this Picant agreed to pay a further
amount on 1 April 2010 that was contingent upon the post-
acquisition performance of Sander.
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(10/06)
At the date of acquisition Picant assessed the fair value of this
contingent consideration at $4.2 million, but by 31 March 2010 it
was clear that the actual amount to be paid would be only $2.7
million (ignore discounting). Picant has recorded the share
exchange and provided for the initial estimate of $4.2 million for
the contingent consideration.
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(10/06)
Dr. Investment 32,640
Cr. Share capital (8,000 x 75% x 3/2 x $1.00) 9,000
Share capital (8,000 x 75% x 3/2 x $2.20) 19,800
Contingent consideration 4,200
Dr. Contingent consideration (4,200-2,700) 1,500
Cr. Decrease in contingent consideration 1,500
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(13/12)
On 1 April 2013, Polestar acquired 75% of the equity share
capital of Southstar. Southstar had been experiencing
difficult trading conditions and making significant losses. In
allowing for Southstar’s difficulties, Polestar made an
immediate cash payment of only $1.50 per share. In
addition, Polestar will pay a further amount in cash on
30 September 2014 if Southstar returns to profitability
by that date.
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(13/12)
The value of this contingent consideration at the date of
acquisition was estimated to be $1.8 million, but at 30
September 2013 in the light of continuing losses, its
value was estimated at only $1.5 million. The contingent
consideration has not been recorded by Polestar. Overall,
the directors of Polestar expect the acquisition to be a
bargain purchase leading to negative goodwill. At the date of
acquisition shares in Southstar had a listed market price of
$1.20 each.
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(13/12)
Dr. Investment 32,640
Cr. Cash (6,000 x 75% x 2 x $1.50) 13,500
Contingent consideration 1,800
Dr. Contingent consideration (1,800-1,500) 300
Cr. Decrease in contingent consideration 300
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