Free workbook · Excel

Acquisition consolidation workbook

What it is

This free Excel workbook works through goodwill and the non-controlling interest on an acquisition under both measurement methods, the pro-rating of a company bought part-way through the year, the remeasurement in a step acquisition, and a partial disposal with and without loss of control. Every sheet uses formulas, every journal balances, and the example figures are labelled.

What’s inside

• Goodwill and the non-controlling interest under both methods, side by side, with the acquisition journal.
• A mid-year purchase consolidated from the acquisition date, with the profit split between owners and non-controlling interest.
• A step acquisition that remeasures the earlier holding and works out goodwill and the gain.
• A partial disposal with control kept, and one with control lost, each with its journal.
• IFRS 3 and IFRS 10 references, with a note where US GAAP differs.

How to use it

1. Goodwill: enter the consideration, the fair value of the net assets, the share bought and the fair value of the non-controlling interest. Choose the method and read the journal.
2. Mid-year purchase: enter the financial year, the acquisition date and the monthly revenue and profit. Only the days after the acquisition date are consolidated.
3. Step acquisition: enter the earlier holding, its carrying amount and its fair value, and the further interest bought.
4. Partial disposal: enter the holding and the share sold. Case A keeps control; case B loses it.
5. Check the journals. Each shows Balanced when the debits equal the credits.

Who is it for?

Group controllers and finance managers preparing their first consolidation after buying a company, and accountants who advise them. It follows IFRS 3 and IFRS 10, and the notes say where US GAAP differs. The ideas are explained in the glossary: goodwillGoodwillThe amount by which the price paid for an acquisition, together with any non-controlling interest and any previously held stake, exceeds the fair value of the identifiable net assets acquired.Open the glossary entry, non-controlling interestNon-controlling interestThe share of a subsidiary's equity and profit that belongs to owners outside the group.Open the glossary entry and step acquisitionStep acquisitionGaining control of a company in stages. The stake held before is remeasured to fair value at the date control is gained, with the difference in profit or loss.Open the glossary entry. When these entries recur every month, Finconsol keeps ownership, non-controlling interest and acquisition dates in one place.

Questions

Which method should I choose for the non-controlling interest?

IFRS 3 lets you choose, deal by deal: a proportionate share of the net assets, or fair value. Fair value gives a larger non-controlling interest and a larger goodwill. US GAAP (ASC 805) always uses fair value. The workbook shows both side by side.

What if the price is less than the net assets?

The sheet shows a gain on a bargain purchase. IFRS 3 requires you to reassess the identification and measurement of the assets, the liabilities and the consideration before you recognise the gain.

Is the days method for a mid-year purchase accurate?

It is an approximation. Where you have a trial balance at the acquisition date, use it: the profit before that date belongs to the net assets acquired, not to the group result.

Does it cover tax or disposal costs?

No. Deferred tax on fair value adjustments, acquisition costs and disposal costs are left out so the logic of each case stays clear.

Are the figures real?

No. They come from a fictional group and are marked as examples.