Acca financial Accounting (FA) Study Text ac ca (FA)

Including the fair value of net assets acquired in consolidation workings  

1 

Adjust both columns of W2 to bring the net assets to fair value at 

acquisition and reporting date. This will ensure that the fair value of net 

assets is carried through to the goodwill and non

­

controlling interest 

calculations. 

 

At acquisition  At reporting date 

 $000 

$000 

Equity share capital 

X 

X 

Share premium 

X 

X 

Revaluation surplus 

X 

X 

Retained earnings 

X 

X 

Fair value adjustments 

X 

X 

 ––– 

––– 

 X 

X 

 ––– 

––– 

The fair value adjustment represents the amount required to adjust the 

relevant item from its current carrying amount in the subsidiary SoFP to its 

identified fair value. 

Note that the total of issued share capital and share premium balances of 

the subsidiary will be the same at the date of acquisition and at the 

reporting date. 

If you have different values for issued share capital at these dates, either 

or both figures will be wrong. Similarly, if the subsidiary has a share 

premium account, the share premium carrying amount should be the same 

at both dates. 

2 

At the reporting date make the adjustment on the face of the SoFP when 

adding across assets and liabilities. 

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