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IFRS 10 says that an investor has control over potential subsidiary when it has: 3 začněte se učit
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Power over the investee. | Exposure or rights to VARIABLE returns from involvement in the investee. | The ability to use power over the investee to AFFECT the investor's returns. An entity that is a parent is required to produce consolidated financial statements.
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IFRS 3 states that the ... method is used to account for business combinations. začněte se učit
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A BUSINESS COMBINATION is where an acquirer obtains... začněte se učit
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Optional ... test can be used to assess whether an acquired set of assets is NOT a business. začněte se učit
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Concentration test concept. 4cz začněte se učit
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The acquired assets are NOT A BUSINESS | if substantially all of the FV of the total assets acquired | is concentrated in a single identifiable asset | or group of similar identifiable assets.
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If the concentration test is not met, a detailed assessment is required to assess if a business as being acquired. To meet the definition of a business... začněte se učit
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inputs and substantive processes must have been acquired that can contribute to the creation of outputs. The outputs themselves are not required.
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2cz začněte se učit
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Economic resources | that can create outputs once processes are applied.
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2cz začněte se učit
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Systems, standards or rules | that can create outputs when applied to inputs. SSR
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3cz začněte se učit
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Goods, services and income.
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The acquisition method has 5 requirements: 5 začněte se učit
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Identify the acquirer. | Identify the acquisition date. | Recognise the subsidiary net asset at FV, | Goodwill | and NCI.
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The acquirer is the entity that has assumed control over entity. The acquirer is NORMALLY the company that transferred ... in the business combination. 3cz acquisition method - identify the acquirer začněte se učit
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cash, | or other assets | or shares
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Acquisition method - identify the acquirer. Other* factors to consider: 3 *other than cash, other assets or equity transference. začněte se učit
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Which entity's former management dominates the combined entity? | Which entity's former owners have the greatest number of votes in the combined entity. | Which entity was bigger. former management domination | former owner voting rights | size of former entities
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Identify the acquisition date definition. The acquisition method. začněte se učit
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The date on which the parent obtained control over the subsidiary.
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Professional fees - accounting treatment The acquisition method - recognise the net assets začněte se učit
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Why the use of NCI at acquisition at FV measure or Proportionate method choice has significant impact on impairment review? začněte se učit
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The group has recognised FULL GOODWILL so this can be added together with the other net assets of the subsidiary and compared with the recoverable amount. Only the group's share of goodwill has been recognised, so goodwill MUST BE GROSSED UP to include the NCI's share PRIOR TO the impairment review.
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IAS 28 začněte se učit
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'an entity over which the investor has significant influence'
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Significant influence DEFINITION: 3cz začněte se učit
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The power to participate | in the financial and operating | policy decisions of an entity.
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A holding of between 20% and 50% of the ... is presumed to give significant influence. začněte se učit
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Joint arrangements definition: začněte se učit
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arrangements where 'two or more parties have joint control' This exist when the relevant activities require unanimous consent of the parties that share control.
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Joint control exist when: 2cz začněte se učit
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when the relevant activities require unanimous consent of the parties that share control over the entity. relevant activities | unanimous consent
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types of Joint arrangements: 2 začněte se učit
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joint operation | joint venture
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Joint operation - venturers have rights to... 2 začněte se učit
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assets | and obligations of the arrangement.
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Joint venture - venturers have rights to... začněte se učit
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to net assets of the arrangements. A joint venture is normally a separate entity.
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Joint venture accounting treatment. začněte se učit
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The same as associates.
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Joint operation accounting treatment: začněte se učit
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Accounts for share of assets, liabilities, income and expenses. ALIE
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In separate FSs, investments in subsidiaries, joint ventures or associates can be accounted for in one the following ways: 3 | IAS 27 začněte se učit
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Cost.| Equity method.| In accordance with IFRS 9 Financial Instruments.
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