Page 484 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx

Chapter 25

Solution
Firstly, draw up the group structure to understand what the relationship is
between the entities. This is a good habit to form as it will be very useful when
the group becomes more complex.
(W1) Group structure

P

100%

S

The next task is to add across the parent and subsidiary's assets and liabilities
in the consolidated statement of financial position.

The share capital and share premium of the group is only ever the share
capital and premium of the parent.

The parent's investment in the subsidiary is ignored in the consolidated
statement of financial position because the investment in the subsidiary is
cancelled against the share of net assets acquired and the excess is
calculated as goodwill.

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