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Chapter 18

Mid-year acquisitions

2.1 Procedure

 When combining subsidiary performance, only include post-acquisition revenue
and expenses

 Assume revenue and expenses accrue evenly unless told otherwise

 Where dividends have been received from the subsidiary in the post-acquisition
period these should be removed from group investment income. Dividends in
the pre-acquisition period will be incorporated within the calculation of net
assets at acquisition

 Remove any intra-group items, such as trading (revenue and cost of sales),
taking care to only exclude the post-acquisition element

 Make consolidation adjustments:

– PURP, period end adjustment so recognise in full

– Fair value depreciation, post-acquisition only, so time-apportion

– Impairment, period end adjustment so recognise in full

 Show split of profits and total comprehensive income between parent and non-
controlling interest (NCI), taking care with NCI to only include post-acquisition
elements.

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