Consolidation and non-controlling interests: intragroup eliminations, unrealised profit in inventory, uniform policies and dates, attribution of profit and deficit balance

• Subsidiary and transactions: shares of the parent and of third parties, intragroup transactions, direction of the sales

  TextRequired

  PARENT_SELLS_TO_THE_SUBSIDIARY_THIRD_PARTIES_HOLD_ORDINARY_AND_PREFERENCE_SHARES

• Intragroup balance to eliminate (reciprocal receivable and payable)

  Number

  120,000

• Inventory bought within the group and still held, at transfer price

  Number

  150,000

• Seller’s profit margin (%)

  Number

  30 %

• Profit of the subsidiary, after harmonisation of policies

  Number

  300,000

• Loss of the subsidiary, after harmonisation of policies

  Number

• Current percentage of non-controlling interests (%)

  Number

  20 %

• Annual cumulative dividends of preference shares held by third parties, declared or not

  Number

  25,000

• Total share of profit attributed to third parties (ordinary and preference)

  Number

  80,000

• Deficit balance of non-controlling interests (amount of the negative balance)

  Number

• Opening balance of non-controlling interests

  Number

  700,000

• Third parties’ share of other comprehensive income

  Number

• Dividends paid to third parties

  Number

  12,000

• Closing balance of non-controlling interests carried in the consolidation schedule

  Number

  768,000

• Accounting policies of the subsidiary compared with the group’s: differences and amount of the adjustment

  Text

• Closing date of the subsidiary, gap with the parent and significant events in between

  Text

• Documents obtained and referenced (subsidiary statements, sales contracts, reconciliation of balances, statement of equity)

  EvidenceRequired

IFRS 10 §B94IFRS 10 §B86IFRS 10 §19IFRS 10 §B87IFRS 10 §B92IFRS 10 §B93IFRS 10 §B95

• Points reviewed: consolidation and non-controlling interests

  ChecklistRequired

  • Items of the parent and the subsidiary combined line by line, the parent’s investment eliminated against its share of equity
  • Intragroup balances, income, expenses and cash flows eliminated in full
  • Unrealised profit on the remaining assets eliminated
  • Uniform accounting policies: adjustments made on consolidation, subsidiary’s own accounts unchanged
  • Same closing date, or additional information, or latest statements adjusted with a gap of no more than three months
  • Profit attributed on current percentages, not those at the acquisition date
  • Third parties’ cumulative preference shares: dividends deducted from the parent’s share of profit, declared or not
  • Loss attributed to third parties even if their balance becomes a deficit
  • Non-controlling interests presented within equity, separately from the equity of the owners of the parent

IFRS 10 §B94IFRS 10 §B86IFRS 10 §B95

• Unrealised profit to eliminate (remaining inventory × seller’s margin)

  Calculation

  45,000

  Inventory bought within the group and still held, at transfer price ; Seller’s profit margin (%)

• Profit attributable to ordinary shares (profit − cumulative preference dividends)

  Calculation

  275,000

  Profit of the subsidiary, after harmonisation of policies ; − Annual cumulative dividends of preference shares held by third parties, declared or not

• Third parties’ share of the profit of the ordinary shares

  Calculation

  55,000

  Profit attributable to ordinary shares (profit − cumulative preference dividends) ; Current percentage of non-controlling interests (%)

• Share of the loss attributed to third parties (loss × current percentage)

  Calculation

  Loss of the subsidiary, after harmonisation of policies ; Current percentage of non-controlling interests (%)

• Closing balance of non-controlling interests (opening + shares − dividends)

  Calculation

  768,000

  Opening balance of non-controlling interests ; Closing balance of non-controlling interests carried in the consolidation schedule ; Third parties’ share of the profit of the ordinary shares ; Annual cumulative dividends of preference shares held by third parties, declared or not ; Third parties’ share of other comprehensive income ; − Dividends paid to third parties

• Entry: elimination of intragroup balances

  Entry

  Account	Debit	Credit
  Payable to a group entity	120,000
  Receivable from a group entity		120,000

• Entry: elimination of unrealised profit in inventory

  Entry

  Account	Debit	Credit
  Elimination of unrealised profit	45,000
  Inventory		45,000

• Entry: attribution of profit to non-controlling interests

  Entry

  Account	Debit	Credit
  Profit attributable to owners of the parent	80,000
  Non-controlling interests		80,000

• Entry: attribution of loss to non-controlling interests

  Entry

  Debit Non-controlling interests (balance may become a deficit) ← Share of the loss attributed to third parties (loss × current percentage) ; Credit Profit attributable to owners of the parent ← Share of the loss attributed to third parties (loss × current percentage)

IFRS 10 §B87IFRS 10 §B92IFRS 10 §B93

• Harmonisation of accounting policies

  JudgmentRequired

  No difference in policy for similar transactions

  Policy difference corrected by a consolidation adjustment / No difference in policy for similar transactions / Not applicable

• Rationale: similar transactions, group policy, amount of the adjustment

  Text

  SAME_POLICIES_FOR_SIMILAR_TRANSACTIONS

• Reporting dates

  JudgmentRequired

  Same closing date as the parent

  Additional information prepared at the parent’s date / Latest statements adjusted for significant events, gap of no more than three months / Same closing date as the parent / Not applicable

• Rationale: practicability of additional information, significant events, gap between the dates

  Text

  SAME_CLOSING_DATE_AS_THE_PARENT

• Effect derived from the entries

  Table

• Normative references cited in this workpaper

  References

• Subsidiary and transactions describedPass
• Harmonisation of policies judgedPass
• Reporting dates judgedPass
• Balances entry balancedPass
• Unrealised profit entry balancedPass
• Profit attribution entry balancedPass
• Loss attribution entry balancedNot evaluated
• Total share of third parties = share of ordinary profit + cumulative preference dividendPass
• Closing balance of non-controlling interests recalculated = balance reportedPass
• Deficit balance flagged: share of the loss of third parties = opening balance + deficit balance (no other movement in the case)Not evaluated

Assets

-165,000

Liabilities

-120,000

Profit or loss

-45,000

OCI

0

Equity

-45,000

• Subsidiary and transactions: shares of the parent and of third parties, intragroup transactions, direction of the sales

  TextRequired

  LOSS_MAKING_SUBSIDIARY_WITH_A_FORTY_PERCENT_THIRD_PARTY_INTEREST

• Intragroup balance to eliminate (reciprocal receivable and payable)

  Number

• Inventory bought within the group and still held, at transfer price

  Number

• Seller’s profit margin (%)

  Number

• Profit of the subsidiary, after harmonisation of policies

  Number

• Loss of the subsidiary, after harmonisation of policies

  Number

  450,000

• Current percentage of non-controlling interests (%)

  Number

  40 %

• Annual cumulative dividends of preference shares held by third parties, declared or not

  Number

• Total share of profit attributed to third parties (ordinary and preference)

  Number

• Deficit balance of non-controlling interests (amount of the negative balance)

  Number

  80,000

• Opening balance of non-controlling interests

  Number

  100,000

• Third parties’ share of other comprehensive income

  Number

• Dividends paid to third parties

  Number

• Closing balance of non-controlling interests carried in the consolidation schedule

  Number

• Accounting policies of the subsidiary compared with the group’s: differences and amount of the adjustment

  Text

  FIFO_AGAINST_WEIGHTED_AVERAGE_COST_FOR_SIMILAR_TRANSACTIONS

• Closing date of the subsidiary, gap with the parent and significant events in between

  Text

  CLOSING_ON_30_SEPTEMBER_ADDITIONAL_INFORMATION_AT_31_DECEMBER_PRACTICABLE

• Documents obtained and referenced (subsidiary statements, sales contracts, reconciliation of balances, statement of equity)

  EvidenceRequired

IFRS 10 §B94IFRS 10 §B86IFRS 10 §19IFRS 10 §B87IFRS 10 §B92IFRS 10 §B93IFRS 10 §B95

• Points reviewed: consolidation and non-controlling interests

  ChecklistRequired

  • Items of the parent and the subsidiary combined line by line, the parent’s investment eliminated against its share of equity
  • Intragroup balances, income, expenses and cash flows eliminated in full
  • Unrealised profit on the remaining assets eliminated
  • Uniform accounting policies: adjustments made on consolidation, subsidiary’s own accounts unchanged
  • Same closing date, or additional information, or latest statements adjusted with a gap of no more than three months
  • Profit attributed on current percentages, not those at the acquisition date
  • Third parties’ cumulative preference shares: dividends deducted from the parent’s share of profit, declared or not
  • Loss attributed to third parties even if their balance becomes a deficit
  • Non-controlling interests presented within equity, separately from the equity of the owners of the parent

IFRS 10 §B94IFRS 10 §B86IFRS 10 §B95

• Unrealised profit to eliminate (remaining inventory × seller’s margin)

  Calculation

  Inventory bought within the group and still held, at transfer price ; Seller’s profit margin (%)

• Profit attributable to ordinary shares (profit − cumulative preference dividends)

  Calculation

  0

  Profit of the subsidiary, after harmonisation of policies ; − Annual cumulative dividends of preference shares held by third parties, declared or not

• Third parties’ share of the profit of the ordinary shares

  Calculation

  0

  Profit attributable to ordinary shares (profit − cumulative preference dividends) ; Current percentage of non-controlling interests (%)

• Share of the loss attributed to third parties (loss × current percentage)

  Calculation

  180,000

  Loss of the subsidiary, after harmonisation of policies ; Current percentage of non-controlling interests (%)

• Closing balance of non-controlling interests (opening + shares − dividends)

  Calculation

  Opening balance of non-controlling interests ; Closing balance of non-controlling interests carried in the consolidation schedule ; Third parties’ share of the profit of the ordinary shares ; Annual cumulative dividends of preference shares held by third parties, declared or not ; Third parties’ share of other comprehensive income ; − Dividends paid to third parties

• Entry: elimination of intragroup balances

  Entry

  Debit Payable to a group entity ← Intragroup balance to eliminate (reciprocal receivable and payable) ; Credit Receivable from a group entity ← Intragroup balance to eliminate (reciprocal receivable and payable)

• Entry: elimination of unrealised profit in inventory

  Entry

  Debit Elimination of unrealised profit ← Unrealised profit to eliminate (remaining inventory × seller’s margin) ; Credit Inventory ← Unrealised profit to eliminate (remaining inventory × seller’s margin)

• Entry: attribution of profit to non-controlling interests

  Entry

  Debit Profit attributable to owners of the parent ← Total share of profit attributed to third parties (ordinary and preference) ; Credit Non-controlling interests ← Total share of profit attributed to third parties (ordinary and preference)

• Entry: attribution of loss to non-controlling interests

  Entry

  Account	Debit	Credit
  Non-controlling interests (balance may become a deficit)	180,000
  Profit attributable to owners of the parent		180,000

IFRS 10 §B87IFRS 10 §B92IFRS 10 §B93

• Harmonisation of accounting policies

  JudgmentRequired

  Policy difference corrected by a consolidation adjustment

  Policy difference corrected by a consolidation adjustment / No difference in policy for similar transactions / Not applicable

• Rationale: similar transactions, group policy, amount of the adjustment

  Text

  GROUP_COST_FORMULA_APPLIED_ON_CONSOLIDATION

• Reporting dates

  JudgmentRequired

  Additional information prepared at the parent’s date

  Additional information prepared at the parent’s date / Latest statements adjusted for significant events, gap of no more than three months / Same closing date as the parent / Not applicable

• Rationale: practicability of additional information, significant events, gap between the dates

  Text

  ADDITIONAL_FINANCIAL_INFORMATION_PREPARED_AT_THE_PARENT_DATE

• Effect derived from the entries

  Table

• Normative references cited in this workpaper

  References

• Subsidiary and transactions describedPass
• Harmonisation of policies judgedPass
• Reporting dates judgedPass
• Balances entry balancedNot evaluated
• Unrealised profit entry balancedNot evaluated
• Profit attribution entry balancedNot evaluated
• Loss attribution entry balancedPass
• Total share of third parties = share of ordinary profit + cumulative preference dividendNot evaluated
• Closing balance of non-controlling interests recalculated = balance reportedNot evaluated
• Deficit balance flagged: share of the loss of third parties = opening balance + deficit balance (no other movement in the case)Pass

Assets

0

Liabilities

0

Profit or loss

0

OCI

0

Equity

0

• Subsidiary and transactions: shares of the parent and of third parties, intragroup transactions, direction of the sales

  TextRequired

  PARENT_SELLS_TO_THE_SUBSIDIARY_THIRD_PARTIES_HOLD_ORDINARY_AND_PREFERENCE_SHARES

• Intragroup balance to eliminate (reciprocal receivable and payable)

  Number

  90,000

• Inventory bought within the group and still held, at transfer price

  Number

  200,000

• Seller’s profit margin (%)

  Number

  25 %

• Profit of the subsidiary, after harmonisation of policies

  Number

  400,000

• Loss of the subsidiary, after harmonisation of policies

  Number

• Current percentage of non-controlling interests (%)

  Number

  25 %

• Annual cumulative dividends of preference shares held by third parties, declared or not

  Number

  30,000

• Total share of profit attributed to third parties (ordinary and preference)

  Number

  122,500

• Deficit balance of non-controlling interests (amount of the negative balance)

  Number

• Opening balance of non-controlling interests

  Number

  900,000

• Third parties’ share of other comprehensive income

  Number

• Dividends paid to third parties

  Number

  20,000

• Closing balance of non-controlling interests carried in the consolidation schedule

  Number

  1,002,500

• Accounting policies of the subsidiary compared with the group’s: differences and amount of the adjustment

  Text

• Closing date of the subsidiary, gap with the parent and significant events in between

  Text

• Documents obtained and referenced (subsidiary statements, sales contracts, reconciliation of balances, statement of equity)

  EvidenceRequired

IFRS 10 §B94IFRS 10 §B86IFRS 10 §19IFRS 10 §B87IFRS 10 §B92IFRS 10 §B93IFRS 10 §B95

• Points reviewed: consolidation and non-controlling interests

  ChecklistRequired

  • Items of the parent and the subsidiary combined line by line, the parent’s investment eliminated against its share of equity
  • Intragroup balances, income, expenses and cash flows eliminated in full
  • Unrealised profit on the remaining assets eliminated
  • Uniform accounting policies: adjustments made on consolidation, subsidiary’s own accounts unchanged
  • Same closing date, or additional information, or latest statements adjusted with a gap of no more than three months
  • Profit attributed on current percentages, not those at the acquisition date
  • Third parties’ cumulative preference shares: dividends deducted from the parent’s share of profit, declared or not
  • Loss attributed to third parties even if their balance becomes a deficit
  • Non-controlling interests presented within equity, separately from the equity of the owners of the parent

IFRS 10 §B94IFRS 10 §B86IFRS 10 §B95

• Unrealised profit to eliminate (remaining inventory × seller’s margin)

  Calculation

  50,000

  Inventory bought within the group and still held, at transfer price ; Seller’s profit margin (%)

• Profit attributable to ordinary shares (profit − cumulative preference dividends)

  Calculation

  370,000

  Profit of the subsidiary, after harmonisation of policies ; − Annual cumulative dividends of preference shares held by third parties, declared or not

• Third parties’ share of the profit of the ordinary shares

  Calculation

  92,500

  Profit attributable to ordinary shares (profit − cumulative preference dividends) ; Current percentage of non-controlling interests (%)

• Share of the loss attributed to third parties (loss × current percentage)

  Calculation

  Loss of the subsidiary, after harmonisation of policies ; Current percentage of non-controlling interests (%)

• Closing balance of non-controlling interests (opening + shares − dividends)

  Calculation

  1,002,500

  Opening balance of non-controlling interests ; Closing balance of non-controlling interests carried in the consolidation schedule ; Third parties’ share of the profit of the ordinary shares ; Annual cumulative dividends of preference shares held by third parties, declared or not ; Third parties’ share of other comprehensive income ; − Dividends paid to third parties

• Entry: elimination of intragroup balances

  Entry

  Account	Debit	Credit
  Payable to a group entity	90,000
  Receivable from a group entity		90,000

• Entry: elimination of unrealised profit in inventory

  Entry

  Account	Debit	Credit
  Elimination of unrealised profit	50,000
  Inventory		50,000

• Entry: attribution of profit to non-controlling interests

  Entry

  Account	Debit	Credit
  Profit attributable to owners of the parent	122,500
  Non-controlling interests		122,500

• Entry: attribution of loss to non-controlling interests

  Entry

  Debit Non-controlling interests (balance may become a deficit) ← Share of the loss attributed to third parties (loss × current percentage) ; Credit Profit attributable to owners of the parent ← Share of the loss attributed to third parties (loss × current percentage)

IFRS 10 §B87IFRS 10 §B92IFRS 10 §B93

• Harmonisation of accounting policies

  JudgmentRequired

  No difference in policy for similar transactions

  Policy difference corrected by a consolidation adjustment / No difference in policy for similar transactions / Not applicable

• Rationale: similar transactions, group policy, amount of the adjustment

  Text

  SAME_POLICIES_FOR_SIMILAR_TRANSACTIONS

• Reporting dates

  JudgmentRequired

  Same closing date as the parent

  Additional information prepared at the parent’s date / Latest statements adjusted for significant events, gap of no more than three months / Same closing date as the parent / Not applicable

• Rationale: practicability of additional information, significant events, gap between the dates

  Text

  SAME_CLOSING_DATE_AS_THE_PARENT

• Effect derived from the entries

  Table

• Normative references cited in this workpaper

  References

• Subsidiary and transactions describedPass
• Harmonisation of policies judgedPass
• Reporting dates judgedPass
• Balances entry balancedPass
• Unrealised profit entry balancedPass
• Profit attribution entry balancedPass
• Loss attribution entry balancedNot evaluated
• Total share of third parties = share of ordinary profit + cumulative preference dividendPass
• Closing balance of non-controlling interests recalculated = balance reportedPass
• Deficit balance flagged: share of the loss of third parties = opening balance + deficit balance (no other movement in the case)Not evaluated

Assets

-140,000

Liabilities

-90,000

Profit or loss

-50,000

OCI

0

Equity

-50,000

• Subsidiary and transactions: shares of the parent and of third parties, intragroup transactions, direction of the sales

  TextRequired

  LOSS_MAKING_SUBSIDIARY_WITH_A_THIRTY_FIVE_PERCENT_THIRD_PARTY_INTEREST

• Intragroup balance to eliminate (reciprocal receivable and payable)

  Number

• Inventory bought within the group and still held, at transfer price

  Number

• Seller’s profit margin (%)

  Number

• Profit of the subsidiary, after harmonisation of policies

  Number

• Loss of the subsidiary, after harmonisation of policies

  Number

  320,000

• Current percentage of non-controlling interests (%)

  Number

  35 %

• Annual cumulative dividends of preference shares held by third parties, declared or not

  Number

• Total share of profit attributed to third parties (ordinary and preference)

  Number

• Deficit balance of non-controlling interests (amount of the negative balance)

  Number

  72,000

• Opening balance of non-controlling interests

  Number

  40,000

• Third parties’ share of other comprehensive income

  Number

• Dividends paid to third parties

  Number

• Closing balance of non-controlling interests carried in the consolidation schedule

  Number

• Accounting policies of the subsidiary compared with the group’s: differences and amount of the adjustment

  Text

  FIFO_AGAINST_WEIGHTED_AVERAGE_COST_FOR_SIMILAR_TRANSACTIONS

• Closing date of the subsidiary, gap with the parent and significant events in between

  Text

• Documents obtained and referenced (subsidiary statements, sales contracts, reconciliation of balances, statement of equity)

  EvidenceRequired

IFRS 10 §B94IFRS 10 §B86IFRS 10 §19IFRS 10 §B87IFRS 10 §B92IFRS 10 §B93IFRS 10 §B95

• Points reviewed: consolidation and non-controlling interests

  ChecklistRequired

  • Items of the parent and the subsidiary combined line by line, the parent’s investment eliminated against its share of equity
  • Intragroup balances, income, expenses and cash flows eliminated in full
  • Unrealised profit on the remaining assets eliminated
  • Uniform accounting policies: adjustments made on consolidation, subsidiary’s own accounts unchanged
  • Same closing date, or additional information, or latest statements adjusted with a gap of no more than three months
  • Profit attributed on current percentages, not those at the acquisition date
  • Third parties’ cumulative preference shares: dividends deducted from the parent’s share of profit, declared or not
  • Loss attributed to third parties even if their balance becomes a deficit
  • Non-controlling interests presented within equity, separately from the equity of the owners of the parent

IFRS 10 §B94IFRS 10 §B86IFRS 10 §B95

• Unrealised profit to eliminate (remaining inventory × seller’s margin)

  Calculation

  Inventory bought within the group and still held, at transfer price ; Seller’s profit margin (%)

• Profit attributable to ordinary shares (profit − cumulative preference dividends)

  Calculation

  0

  Profit of the subsidiary, after harmonisation of policies ; − Annual cumulative dividends of preference shares held by third parties, declared or not

• Third parties’ share of the profit of the ordinary shares

  Calculation

  0

  Profit attributable to ordinary shares (profit − cumulative preference dividends) ; Current percentage of non-controlling interests (%)

• Share of the loss attributed to third parties (loss × current percentage)

  Calculation

  112,000

  Loss of the subsidiary, after harmonisation of policies ; Current percentage of non-controlling interests (%)

• Closing balance of non-controlling interests (opening + shares − dividends)

  Calculation

  Opening balance of non-controlling interests ; Closing balance of non-controlling interests carried in the consolidation schedule ; Third parties’ share of the profit of the ordinary shares ; Annual cumulative dividends of preference shares held by third parties, declared or not ; Third parties’ share of other comprehensive income ; − Dividends paid to third parties

• Entry: elimination of intragroup balances

  Entry

  Debit Payable to a group entity ← Intragroup balance to eliminate (reciprocal receivable and payable) ; Credit Receivable from a group entity ← Intragroup balance to eliminate (reciprocal receivable and payable)

• Entry: elimination of unrealised profit in inventory

  Entry

  Debit Elimination of unrealised profit ← Unrealised profit to eliminate (remaining inventory × seller’s margin) ; Credit Inventory ← Unrealised profit to eliminate (remaining inventory × seller’s margin)

• Entry: attribution of profit to non-controlling interests

  Entry

  Debit Profit attributable to owners of the parent ← Total share of profit attributed to third parties (ordinary and preference) ; Credit Non-controlling interests ← Total share of profit attributed to third parties (ordinary and preference)

• Entry: attribution of loss to non-controlling interests

  Entry

  Account	Debit	Credit
  Non-controlling interests (balance may become a deficit)	112,000
  Profit attributable to owners of the parent		112,000

IFRS 10 §B87IFRS 10 §B92IFRS 10 §B93

• Harmonisation of accounting policies

  JudgmentRequired

  Policy difference corrected by a consolidation adjustment

  Policy difference corrected by a consolidation adjustment / No difference in policy for similar transactions / Not applicable

• Rationale: similar transactions, group policy, amount of the adjustment

  Text

  GROUP_COST_FORMULA_APPLIED_ON_CONSOLIDATION

• Reporting dates

  JudgmentRequired

  Same closing date as the parent

  Additional information prepared at the parent’s date / Latest statements adjusted for significant events, gap of no more than three months / Same closing date as the parent / Not applicable

• Rationale: practicability of additional information, significant events, gap between the dates

  Text

  SAME_CLOSING_DATE_AS_THE_PARENT

• Effect derived from the entries

  Table

• Normative references cited in this workpaper

  References

• Subsidiary and transactions describedPass
• Harmonisation of policies judgedPass
• Reporting dates judgedPass
• Balances entry balancedNot evaluated
• Unrealised profit entry balancedNot evaluated
• Profit attribution entry balancedNot evaluated
• Loss attribution entry balancedPass
• Total share of third parties = share of ordinary profit + cumulative preference dividendNot evaluated
• Closing balance of non-controlling interests recalculated = balance reportedNot evaluated
• Deficit balance flagged: share of the loss of third parties = opening balance + deficit balance (no other movement in the case)Pass

Assets

0

Liabilities

0

Profit or loss

0

OCI

0

Equity

0