Mid-year acquisition, intragroup loans and dividends and other adjustments

In this lesson

1. 0:00 Mid-year acquisition and time apportionment
2. 1:01 Consolidating revenue and expenses from acquisition date
3. 2:26 Profit split between parent and minority shareholders
4. 3:43 Intra-group loans and interest elimination
5. 4:53 Dividend cancellation on consolidation
6. 5:48 Non-current asset transfers and adjustments
7. 6:30 Goodwill impairment and fair value adjustments
8. 8:00 Worked example: Basics and Crimson consolidation
9. 10:24 Calculating NCI share with adjustments

About this lesson

You'll discover why time apportionment matters when a subsidiary is acquired partway through the year, how to eliminate intragroup loans, dividends, and transactions to reflect the group's true economic position, and which adjustments (goodwill impairment, fair value depreciation, asset transfers) must be made in the consolidated statement of profit and loss. This content is essential for SBR and AFM papers, where consolidation accuracy directly impacts exam success. The video walks through the mechanics of mid-year acquisition accounting step by step. When a parent acquires a subsidiary after the financial year has begun, only the subsidiary's income and expenses from the acquisition date onwards are included in the consolidated statement. You'll learn to apportion revenue, costs, and all profit line items by the number of months the subsidiary was controlled, then split the final profit between the parent company shareholders and non-controlling interests. The key principle: everything gets time-apportioned first, then the profit split is applied. You'll also master the cancellations required on consolidation. Intragroup loans and the interest paid between group companies must be eliminated because they represent internal transactions with no economic substance to the group. Similarly, dividends paid by subsidiaries to parents are cancelled out—only dividends paid by the parent to external shareholders appear in the consolidated statements. The lesson covers additional adjustments too: profits or losses on transfers of non-current assets between group companies, goodwill impairment recognised during the year, and fair value depreciation adjustments that arise on acquisition but aren't reflected in individual company statements. A worked example ties everything together, showing how to build a consolidated statement of profit and loss when goodwill impairment and fair value adjustments are present, and how to correctly allocate the adjusted profit between parent shareholders and the non-controlling interest. You'll see the practical approach: adjust the subsidiary profit for all group items first, then apply the minority percentage to calculate the NCI share.

Duration: 11m