Question 1 - Set up

In this lesson

1. 0:00 Question Overview and Requirements
2. 2:01 Understanding Consolidation Concepts
3. 2:22 Goodwill Calculation and Zero Coupon Bonds
4. 5:00 Provisions and Legal Claims
5. 6:29 Draft Financial Statements and Adjustments
6. 7:16 Answering Strategy and Approach

About this lesson

This video sets you up to tackle consolidation accounting confidently—covering associates, subsidiaries, goodwill, provisions, and financial statement adjustments. You'll see how to manage your time across the 30-mark question and understand which parts require exhibits and which test your core knowledge alone. The question centres on France, a group with subsidiaries, and its acquisition of Paris. Part A tests your foundational knowledge of when investments qualify as associates or subsidiaries and how to account for them—no exhibits needed, just clear explanation. Parts B and C move into calculations: goodwill arising on acquisition and the correct treatment of a legal case and insurance claim. Part D brings it together, asking you to correct the consolidated statement of financial position using the information from earlier parts. You'll also see the exhibits in detail: investment and net asset information for Paris, details of the legal dispute and insurance coverage, and the draft consolidated statement of financial position. The key issue flagged upfront is that France has incorrectly consolidated Paris as a subsidiary when it should be treated as an associate under equity accounting. Understanding this error early helps you structure your answers effectively and avoid similar mistakes in the exam.

Duration: 8m