Preparation of Group Financial Statements

Accounting for business combinations present considerable challenges for preparers of MFRS financial statements, particularly the changes in controlling and non-controlling interests, purchase price allocation and goodwill.  Since coming into force, MFRS 3 has been through several amendments, the latest being definition of a business which has come into effect from 1 January 2020.

Join us to gain a sound understanding of the requirements and methodology in the Preparation of Group Financial Statements which cover the MFRS 3,10,11,12, 13, 128 and 136, Accounting for acquisition and loss of control of interests in subsidiaries and associates, determination of the purchase price allocation (PPA), as well as goodwill and impairment test on goodwill under MFRS 136.

Learning Outcomes:

• Understand the requirements and application of MFRS 3 Business Combinations and related Standards
• Differentiate between the different levels of investments and identify the appropriate accounting treatment to apply
• Perform a PPA exercise and calculate goodwill by applying the rules in MFRS 3 Business Combinations and MFRS 13 Fair Value Measurement
• Evaluate the impact of contingent consideration and learn the recognition and measurement rules for contingent liabilities
• Perform an impairment test on goodwill based on MFRS 136

Programme Outline:

• Day 1
• 1. Introduction to Group Accounts
• The Concept of Corporate Group and the Recognition Criterion of Control
• The Requirements of the Companies Act 2016, MFRS 10, Consolidated Financial Statements and MFRS 127(revised), Separate Financial Statements
• 2. Acquisition Accounting MFRS 3
• Definition of a business and a business combination
• Determining whether a transaction is a business combination
• Amendments to MFRS 3
• Scope of exemptions
• Identifying the acquirer
• Determining the acquisition date and consideration transferred
• 3. Recognising and Measuring Identifiable Assets Acquired, Liabilities Assumed, and Non-Controlling Interests
• Recognition and measurement principles
• Measurement principle for assets and liabilities
• Assets with uncertain cash flows (fair value adjustments) and assets that may not be used
• Recognising and measuring the identifiable assets acquired, the liabilities assumed and any non -controlling interest in the acquiree
• Choice in the measurement of non-controlling interests
• Exceptions to the recognition and measurement principles
• 4. Recognising and Measuring Goodwill and Determining Purchase Price Allocation (PPA)
• Determining what is part of the business combination transaction
• Bargain purchases
• Consideration transferred and PPA based on the fair value of assets acquired, MFRS 13
• Testing goodwill for impairment
• Day 2
• 5. Business Combinations Achieved in Stages
• Business combinations achieved by step acquisitions
• Business combinations achieved without the transfer of consideration
• Contingent consideration
• Dealing with acquisition-related costs
• 6. Subsequent Measurement and Accounting
• Pre-existing relationships and reacquired rights
• Contingent liabilities and contingent payment to employees
• Summary of the Disclosure Requirements
• Disclosure of information about current business combinations
• Disclosure of information about adjustments of past business combinations
• 7. Consolidated Financial Statements: MFRS 10
• Determining control
• Accounting for changes in ownership interests
• Disclosure of interests in other entities: MFRS 12
• 8. Joint Arrangements: MFRS 11
• 9. Investments in Associates and Joint Ventures: MFRS 128
• Acquisition and loss of significant influence
• Applying the equity method
• Impairment testing: MFRS 136