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

Context

Tarvane Group SA (fictitious entity) consolidates two subsidiaries with minority third parties: Corvane SA, profitable, with cumulative preference shares held by third parties, and Dentra SARL, loss-making, which closes three months earlier and applies another inventory method. You prepare the 20X6 consolidation file.

Assignment

Consolidation of Corvane and Dentra: eliminations, harmonisation and attribution to third parties

Purpose of the workpaper

List the intragroup transactions and balances, the policies and the closing date of the subsidiary, then compute the unrealised profit, the attribution of profit or loss to non-controlling interests (after cumulative preference dividends) and their balance. Margins, percentages and dividends are case data; the workpaper shows the full elimination of balances and of the unrealised profit and leaves the judgment on the harmonisations.

Questions of the file covered by this workpaper

• Dentra: how to deal with the three-month gap between its closing date and the group’s?
• Dentra: what harmonisation of policies is needed on consolidation? Compute the loss retained for consolidation.
• Compute the unrealised profit on the remaining inventory to eliminate.
• Corvane: compute the profit attributable to ordinary shares after the cumulative preference dividends, declared or not.
• Corvane: compute the third parties’ share of the profit of the ordinary shares, then their total share of profit with the preference shares.
• Corvane: compute the closing balance of non-controlling interests.
• Dentra: compute the share of the loss attributed to third parties on the current percentage.
• Dentra: the loss attributed to third parties exceeds their opening balance. What happens to their balance and is the loss capped?
• Record the entry eliminating the intragroup balance between Corvane and Tarvane.
• Record the entry eliminating the unrealised profit in inventory.
• Record the entry attributing Corvane’s profit to third parties.
• Record the entry attributing Dentra’s loss to third parties.

• MemoGroup profile and case conventionsOpen
• ExtractCorvane SA: profit, preference shares, third parties and intragroup transactionsOpen
• ExtractDentra SARL: loss, policies, closing date and third partiesOpen
• MemoVehicle replacement planOpen