Plot Twist in Finance! 🌟 'View to Resale' Demystified

Welcome, Ladies and Gentlemen! 🎉

Ever found yourself in the perplexing labyrinth of accounting principles? Well, brace yourself, because today we’re diving into a particular corner: ‘View to Resale’. Intrigued? Good! Because this journey involves subsidiaries, a sprinkle of humor, and a dash of accounting wizardry.

What is ‘View to Resale’? 🤔

Imagine you’re throwing a killer party, and you buy a giant chocolate fountain. But, plot twist! You don’t plan on keeping that beauty for more than a week. Why? Because it’s more chocolate fountain than you ever need! Enter the accounting principle of ‘View to Resale’. It’s like buying a company but not planning to keep the new team invited to your financial picnic longer than needed to make some profit.

The Technical Jazz 🎷

In the land of consolidated financial statements, there’s an exception party – and it’s in Section 27 of the Financial Reporting Standard Applicable in the UK and Republic of Ireland. Only here, you can exclude subsidiary undertakings if they are held solely for the resale. Let’s simplify:

    flowchart LR
	    A(Group's subsidiary) --View to Resale-> B(Current Asset)
	    B --> |Valuation Method 1| C[Cost less impairment]
	    B --> |Valuation Method 2| D[Fair Value]

Why Go Through This Drama? 🎭

1. Exclusive Custody Only for Resale: You’ve bought that chocolate fountain (sub) but don’t plan on merging it into your sweet empire (consolidated statements).
2. Parent Company Rules: The parent company should never have danced with this subsidiary in its group accounts.
3. Valuation Options: Either at cost minus depreciation from being stuffed away (impairment) or fair value, which is accounting speak for “What’s it worth in the market?”

In the IFRS Universe ✨

Hold onto your accountants, because IFRS 5 (International Financial Reporting Standard 5, for the uninitiated) is here to save the day! It’s termed “Non-current Assets Held for Sale and Discontinued Operations,” like that super strict hall monitor making sure everything’s tidy.

Related Fun Terms

Go ahead, check them out:

• exclusion of subsidiaries from consolidation
• held-for-sale

In Case You Dozed Off 😴

Here’s a quick summary: Only buy a subsidiary if you plan to flip it. Don’t make it part of your financial family photos on the consolidated balance sheet. Note it as a current asset and decide if you prefer to list it at cost minus any assumed damage (from wear and tear) or fair value.

Fun Quiz Time! 🎓

Dust off those books and try these yourself…

1. What’s a key condition for a subsidiary to not be included in consolidated financial statements?

   • a) Cost basis only
   • b) Exclusively held for subsequent resale
   • c) Located overseas
   • d) Registered on a Tuesday

2. Under what criteria should the subsidiary appear on the financial statement if viewed for resale?

   • a) As deferred revenue
   • b) As current expenses
   • c) As current asset
   • d) Grandfathered in

3. What standard applies in the UK and Republic of Ireland for ‘View to Resale’?

   • a) RSA 45
   • b) FRS Section 27
   • c) NATO 3
   • d) FRA Chapter 7

4. How does IFRS 5 relate to ‘View to Resale’?

   • a) It doesn’t
   • b) Non-current Assets Held for Sale and Discontinued Operations
   • c) Assets for Immediate Revenue Recognition
   • d) Discontinued Revenue Streams

…And many more waiting for your witty clicks!

Until next time, keep those financial statements as tidy and riveting as this read!