Corporate reporting – an easy way to score marks

Corporate Reporting is one of the core examinations of ACCA which tests the students on various issues of accounting. Consolidation being one of the key areas can support you to a great degree in not only passing the exam, but also laying a strong foundation to help you understand other topics.

So, given it’s importance, how do we make sure that we score the maximum marks in corporate reporting?

Here’s a fun acronym that will give you 5 main workings to "Go and Fetch Good Results Now:"

G: Group structure

Proper planning means half the job done! Identify the group to plan out your answer.

F: Fair value adjustments

At the date of acquisition all the net assets of the subsidiary are to be brought at the fair values which can result in the fair value adjustment of any one or two assets. Make sure you calculate the excess depreciation on increased fair values as this will affect your group retained earnings.

G: Goodwill

Identify all the types of consideration paid by parent to acquire the subsidiary. Also, identify the method of goodwill given in the question (full or proportionate) and work out the NCI amount based on the method suggested. Value the net assets at Acquisition and do not forget to impair the goodwill if given in the question.

R: Retained Earnings

The best way to work out retained earnings by avoiding mistakes is to segregate your working in stages. Make as many columns in the working as there are companies and then post values in the respective columns to avoid mistakes.

N: Non-controlling interest

This is the easiest working as you can pick the FV of NCI from the goodwill working above and then add share of subsidiary by picking the values of subsidiary from the working of retained earnings above. With this Big Five working you will collect about 80% marks in F7 question and about 60% marks in calculation part of P2 consolidation.

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