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assume the same facts as in above except that in this situation entity a only acquir 611770

Pooling of interests method restatement of financial information for periods prior to the date of the combination (2)

Assume the same facts as in above, except that in this situation Entity A only acquired Entity C on 1 July 2012 (i.e. the transaction is still considered to be under common control at the date of Entity B “s acquisition of Entity C, but Entity B and Entity C were not under common control during the entire comparative period).

In preparing its consolidated financial statements for the year ended 31 December 2013, should Entity B include financial information for Entity C for the period prior to the date of obtaining control on 1 October 2013 (thereby restating the 2012 comparatives) in its consolidated financial statements as if the business combination (and the investment in Entity C) took place as from 1 January 2012?

Approach 1 Restatement

If Entity B applies Approach 1 as its accounting policy, Entity B only includes financial information for Entity C as from 1 July 2012, restating the 2012 comparatives from that date only, in its consolidated financial statements for 2013.

Approach 2 No restatement

If Entity B applies Approach 2 as its accounting policy, this has no impact as Entity B does not restate the financial information in its consolidated financial statements for 2013 (including the 2012 comparatives) for any financial information for Entity C prior to 1 October 2013 (the date of the combination).

Pooling of interests method no restatement of financial information for periods prior to the date of the combination impact on the composition of equity and reflection of the history.

Assume the same facts as in above, with Entity B adopting Approach 2 No restatement.

On 1 October 2013 Entity C had an AFS reserve of €100. At the next reporting date, 31 December 2013, the AFS investment is sold. In Entity B “s consolidated financial statements, is the €100 recycled to the income statement?

Entity B has a choice of two approaches for its accounting policy, which must be applied consistently:

Approach 2a No restatement of prior periods but application of pooling values

Entity B recognises an AFS reserve of €100 at the date of the transaction. When the investment is subsequently sold, the €100 is recycled to profit or loss for the year.

Approach 2b No restatement of prior periods with initial recognition at carry-over basis

Entity B does not recognise the AFS reserve at the date of the combination. When the investment is subsequently sold, there will be no additional gain to be recycled to the profit or loss for the year.

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