Section B
MPERS which is chosen by small SME‘s insistence on cost saving. As compared to MFRS, MPERS is less compliance cost involved. In the foreseeable future, small SMEs do not plan to go for IPO. Whereas, for MFRS which is chosen by the Company with holding company that requires to prepare a group consolidated accounts with Full FRS standard and plan to go for IPO. It is effortless for consolidation and major adjustment is not required. (3E Accounting, 2016) There are three differences between MPERS and MFRS financial reporting treatment of goodwill recognized on the acquisition of subsidiary. First and foremost, the point is Business Combinations. For MPERS, according to Section 19, scope contains all business combinations, except for …show more content…
According to EY partner-Hoh Yoon Hoong, he suggested that companies regard the greater differences between MPERS and MFRS. For MPERS, the permitted model is the cost model. All intangible assets, such as goodwill, are assumed to have finite lives and are amortized. The amortization approach applies to all intangible assets (Board, 1997). Section 27 stated that the test of impairment is needed at each reporting date when there is any indication of impairment [S27.7]. On the contrary, for MFRS, the tangible and intangible assets, it can be said that MFRS allows for two models which are the cost model or fair value model. Goodwill and other intangibles with indefinite lives are reviewed for impairment test must be performed annually and not amortized under IAS 38. Therefore, if the parent choose MFRS and adopts the cost model, it makes no sense for the subsidiary, a private entity, to adopt MPERS, which only has the fair value model option. If the parent adopts the cost model but the subsidiary adopts MPERS, the subsidiary will have to obtain a valuation for its investment properties for purposes of its statutory reporting but the carrying value of the investment properties carried at fair value will have to be restated back to cost to be in line with the parent company’s accounting policy (Lee, 2016). MPERS distribute the cost of combination to share of the assets acquired and liabilities assumed …show more content…
For MPERS, according to Section 9, uses a control model based on the power to regulate the financial and operating policies in order to obtain favor [S9.4]. If the parent itself is a subsidiary and it intermediate or ultimate parent will generate CFS that comply with MFRSs or this Standard. A subsidiary is prohibited from the CFS if it is acquired and is held with the objective of selling or disposing of it within one year from its acquisition date. In accordance with Section 11, such subsidiary as an investment is account for in this later case [S9.3]. Incorporate the requirements on SPE using, other than the control criterion, indicators of risks and rewards [S9.11]. In the statement of equity, presenting any changes in interests in subsidiaries without loss of control [S6.3(c) (iii)] On disposal of a subsidiary, the cumulative exchange difference shall not be reclassified to profit or loss [S9.18]. Any remaining interest, whether a financial asset or becomes an associate or a JV, is measured at the carrying amount at the date control is lost and no re-measurement to fair value[S9.19] Full attribution of profit or loss and OCI to NCI even if it results in a deficit to NCI [S9.22] (Tong,
MPERS which is chosen by small SME‘s insistence on cost saving. As compared to MFRS, MPERS is less compliance cost involved. In the foreseeable future, small SMEs do not plan to go for IPO. Whereas, for MFRS which is chosen by the Company with holding company that requires to prepare a group consolidated accounts with Full FRS standard and plan to go for IPO. It is effortless for consolidation and major adjustment is not required. (3E Accounting, 2016) There are three differences between MPERS and MFRS financial reporting treatment of goodwill recognized on the acquisition of subsidiary. First and foremost, the point is Business Combinations. For MPERS, according to Section 19, scope contains all business combinations, except for …show more content…
According to EY partner-Hoh Yoon Hoong, he suggested that companies regard the greater differences between MPERS and MFRS. For MPERS, the permitted model is the cost model. All intangible assets, such as goodwill, are assumed to have finite lives and are amortized. The amortization approach applies to all intangible assets (Board, 1997). Section 27 stated that the test of impairment is needed at each reporting date when there is any indication of impairment [S27.7]. On the contrary, for MFRS, the tangible and intangible assets, it can be said that MFRS allows for two models which are the cost model or fair value model. Goodwill and other intangibles with indefinite lives are reviewed for impairment test must be performed annually and not amortized under IAS 38. Therefore, if the parent choose MFRS and adopts the cost model, it makes no sense for the subsidiary, a private entity, to adopt MPERS, which only has the fair value model option. If the parent adopts the cost model but the subsidiary adopts MPERS, the subsidiary will have to obtain a valuation for its investment properties for purposes of its statutory reporting but the carrying value of the investment properties carried at fair value will have to be restated back to cost to be in line with the parent company’s accounting policy (Lee, 2016). MPERS distribute the cost of combination to share of the assets acquired and liabilities assumed …show more content…
For MPERS, according to Section 9, uses a control model based on the power to regulate the financial and operating policies in order to obtain favor [S9.4]. If the parent itself is a subsidiary and it intermediate or ultimate parent will generate CFS that comply with MFRSs or this Standard. A subsidiary is prohibited from the CFS if it is acquired and is held with the objective of selling or disposing of it within one year from its acquisition date. In accordance with Section 11, such subsidiary as an investment is account for in this later case [S9.3]. Incorporate the requirements on SPE using, other than the control criterion, indicators of risks and rewards [S9.11]. In the statement of equity, presenting any changes in interests in subsidiaries without loss of control [S6.3(c) (iii)] On disposal of a subsidiary, the cumulative exchange difference shall not be reclassified to profit or loss [S9.18]. Any remaining interest, whether a financial asset or becomes an associate or a JV, is measured at the carrying amount at the date control is lost and no re-measurement to fair value[S9.19] Full attribution of profit or loss and OCI to NCI even if it results in a deficit to NCI [S9.22] (Tong,