consolidation and separate financial statement Presented By Karez I Kareem Supervised By ProfDr Mehmet Civan SON SISTER BROTHER ID: 323405
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Slide1
consolidation and separate financial statement
Presented
By:
Karez I. Kareem
Supervised
By: Prof.Dr. Mehmet CivanSlide2
SON SISTER BROTHER SEPARATE
Parent
company
IAS A
---- 0---- 0---- 0---- 0---- 0
IAS C---- 0---- 0---- 0---- 0---- 0
IAS B---- 0---- 0---- 0---- 0---- 0Slide3
son sister brotherConsolidation
A
B C ---- 0 ---- 0 ---- 0 ---- 0---- 0 ----
0 ---- 0 ---- 0---- 0 ---- 0 ---- 0 ---- 0---- 0 ---- 0
---- 0 ---- 0---- 0 ---- 0 ---- 0 ---- 0
PARENR
COMPANY
IAS
Slide4
Definition of Consolidated Financial Statements Consolidated financial statements are the financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity.
. Slide5
Definition of Separate Financial StatementsA Separate financial statements are those presented in addition to consolidated financial statements or in addition to financial statements in which investments in associates or joint ventures are accounted for using the equity method. Separate financial statements need not be appended to, or accompany, those statements.Slide6
ControlIn evaluating whether an entity has control over another entity it must first be ascertained whether the entity has the power to participate in the financial and operating policy decisions of the other entity. Control is presumed to exist when the parent owns directly or indirectly, through subsidiaries, more than half of the voting power of an entity. In some instances this will be clear-cut. However, in other circumstances, such ownership may not constitute control. Slide7
Non-controlling interest non-controlling interest is measured using either the fair value method or the proportionate share method. The difference between the two is that with the fair value method, in calculating acquisition date goodwill, the non-controlling interest’s stake in the entity is valued at fair value and this is used along with what the parent paid to acquire its stake in the subsidiary to calculate goodwill arising on 100 per cent of the subsidiary. Slide8
GoodWill
good will frequently is recognized in purchase-type business combinations because the total cost of the combine exceeds the current fair value of identifiable net assets of the combine. the amount of goodwill recognized on the date the business combination is consummated may be adjusted subsequently when contingent consideration become issuable.Slide9
Consolidation Procedures The consolidated financial statements present financial information about the group as a single economic entity. In preparing consolidated financial statements, an entity shall:
Slide10
A_ combine the financial statements of the parent and its subsidiaries line by line by adding together like items of assets, liabilities, equity, income and expenses. B_ eliminate the carrying amount of the parent’s investment in each subsidiary and the parent’s portion of equity of each subsidiary.Slide11
C_ measure and present non-controlling interest in the profit or loss of consolidated subsidiaries for the reporting period separately from the interest of the owners of the parent. D_ measure and present non-controlling interest in the net assets of consolidated subsidiaries separately from the parent shareholders’ equity in them.Slide12
Question : 1Entity A owns a 60 per cent voting interest in Entity B and a 10 per cent voting interest in Entity C. Entity B owns a 30 per cent voting interest in Entity C. How should Entity A account for its investment in Entity C in its consolidated financial statements?
(
a) As a subsidiary, because Entity A controls Entity C
.(b) As an associate. (c) As an associate, if significant influence can be ascertained. Slide13
Question : 2Entity A owns a 60 per cent voting interest in Entity B and a 10 per cent voting interest in Entity C. Entity B owns a 50 per cent voting interest in Entity C. How should Entity A account for its investment in Entity C in its consolidated financial statements?
(
a) As a subsidiary, because Entity A controls Entity C.
(b) As an associate. (c) As an associate, if significant influence can be ascertained. Slide14
problem : consolidation procedures
On
31 December 20X0 Entity A acquired all of the ordinary shares, which carry voting rights at a general meeting of shareholders, of Entity B for CU6,000(4) in cash and it controlled Entity B from that date. The acquisition-date statements of financial position of Entities A and B and the fair values of the assets and liabilities
recognized on Entity B’s statement of financial position were:Slide15
Entity A Entity B
Carrying Carrying
Fair
amount
amount value CU CU CUAssets Non-current assetsBuilding
and other PPE 7,000 3,000 3,300 Investment in Entity B 6,000 13,000 3,000 Current assets Inventories 700 500 600
Trade receivables 300 250 250 Cash 1,500 700 700 2,500 1,450 Total assets 15,500
4,450 Slide16
Equity and liabilities Equity Share capital
5,000
2,000
Retained earnings 10,200 2,300
15,200 4,300 Current liabilitiesTrade payables 300 150 150 300
150 Total liabilities and equity 15,500 4,450 Slide17
For One Company SME Carrying amount CU Assets
Non-current
assets
Buildings 1,000 Investment in SME B 900 +
1,900 Current assets Inventories 200 Trade receivables 400 Cash 500 1,100 Total assets
3,000 Slide18
Equity and liabilities Equity Share capital 800 Retained earnings 1,400
2,200
Current liabilities Trade payables
800 800 Total liabilities and equity 3,000 Slide19
Combination For Two Company Column: A
B C
D E Entity A Entity B Consolidation Consolidation adjustments (ie Column B+
Carrying Carrying Column C+ amount amount column D) CU CU CUAssets Non-current
assets Goodwill 1,300(a) 1,300 Buildings and other PPE 7,000 3,000 300 10,300 Investment in Entity B 6,000 (6,000) 13,000 3,000 11,600Slide20
Current assets Inventories 700 500 100 1,300 Trade receivables 300 250 550 Cash 1,500 700
2,200
2,500 1,450 4,050 Total
assets 15,500 4,450 15,650 Equity and liabilities Equity Share capital 5,000 2,000 (
2,000) 5,000 Reserves 10,200 2,300 (2,300) 10,200 Total equity 15,200 + 4,300 15,200 +Current
liabilities Trade payables 300 150 450 300 + 150 450 +Total liabilities 15,500
= 4,450 15,650 =
and equity Slide21
For two company SME A SME B Carrying Fair Consolidation
amount value adjustments Consolidated
CU CU
CU CU Assets Non-current assets Goodwill 100(a) 100 Buildings 1,000 700 1,700 Investment in SME B 900
(900) - 1,900 + 700 + 1,800 Current assets Inventories 200 100 300
Trade receivables 400 300 700 Cash 500 150 650 1,100 + 550 + 1,650 Total assets
3,000 = 1,250 = (
800) 3,450Slide22
Equity and liabilities Equity Share capital
800 600 (
600)
800 Retained earnings 1,400 200
(200) 1,400 2,200 + 800 + 2,200 Current liabilities Trade liabilities 800
450 1,250 800 + 450 + 1,250 Total liabilities and
equity 3,000 = 1,250 = (800) 3,450 Slide23
First Book : modern advanced accounting by: LARSEN
second
Internet
:
1_ IAS 27 — Consolidated and Separate Financial Statements www.iasplus.com/en/standards/ias/ias27
2_ Consolidated and Separate Financial Statements - IFRSwww.ifrs.org/IFRS-for-SMEs/.../Module%209_version%202013.pdfSlide24
3_ IAS 27: Separate financial statements | Accounting ... - ICAEWwww.icaew.com/en/library/subject-gateways/accounting.../ifrs/ias-27
4
_
IAS 27 (2003/2008) Consolidated and Separate Financial ...
www.icaew.com/.../financial-reporting/.../ias-27-2003-2008-consolidated...5_ IAS 27 Consolidated and Separate Financial Statementswww.tagi.com/UploadFiles/IFRS_AND_IASB_Standards/IAS27.pdf