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Unit 17 - Equity Accounting (Complexities with equity accounting (LO1)…
Unit 17 - Equity Accounting
Applying the equity method (LO1)
Step 1 - Ensure consistent accounting policies and reporting dates (CSG 17-4)
Step 2 - Determine whether to apply equity method (CSG 17-4)
Differences - equity and consol methods (CSG 17-3)
Step 3 - Prepare equity accounting journals and adjustments (CSG 17-5)
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Equity accounting journal entries
Investors share in post-acquisition movements in reserves and opening retained earnings (CSG 17-8)
Eliminate effect of current year dividends paid/declared (CSG 17-8)
Investors share of current year profits (CSG 17-8)
Adjustments to share of associates profit (CSG 17-9)
Negative goodwill on acquisition
Fair value and depreciation adjustments
Elimination of unrealised profit/loss on transactions between investor and associate
Complexities with equity accounting (LO1)
Changes in ownership interest (CSG 17-10)
Consolidating a foreign associate (CSG 17-10)
Recognising tax effect equity carrying amount (CSG 17-10)
Impairment of investment (CSG 17-11)
Discontinuing equity accounting (CSG 17-11)
Significant influence and control (LO2)
Significant influence - associates (CSG 17-11)
Joint control (CSG 17-13)
Disclosures (CSG 17-14)