Please enable JavaScript.
Coggle requires JavaScript to display documents.
Chapter 2 & 3- Financial Statement For Group Company (Consolidated…
Chapter 2 & 3- Financial Statement For Group Company (Consolidated Statement of Comprehensive Income)
Why need consolidated statement of comprehensive income?
• The consolidated financial statements show the overall direction of a group of companies. It gives existing and potential investors a comprehensive picture of the company and its future.
Consolidated financial position is the financial statement of a company that has several divisions or subsidiaries
-
Positive goodwill:
• When the value of the consideration exceeds the aggregate fair value of the net assets acquired at the acquisition date
• Recorded as an asset
Negative goodwill
• The amount of money paid as a bargain purchase when a firm acquires another company / its assets
~ The goodwill on consolidation can be determined with the difference between the purchase price of the company and the fair value of net identified assets.
Pre- / Post- acquisition
Post-acquisition reserve is the increase in the subsidiary's reserves following its acquisition by the parent business.
-
Minority Interests
Definition:
• The amount of share that less than 50% interest in a company
• Being recorded in the company's consolidated financial statements
Accounting treatment of the minority interest in consolidation:
• Minority interests should be reported separately from liabilities and equity of the parent's shareholders in the consolidated balance sheet
• The subsidiary's equity (common share capital and reserve fund) will be divided proportionally to minority shareholders and the parent company
-
(i) Inter-entity trading is to manage allocations and transfers between related companies. Besides, the income statement's sales and purchases data must be adjusted to avoid double counting of sales.
(ii) Intra group activities is the activities that take place in a group, particularly a social group. In addition, the influence of intra group activities must be cancelled out in the consolidated financial statements
Transfer of non-current asset:
• Will happens when the transfer of all of the group's investment properties to a property investment subsidiary
• The consolidation problems do not exist when the transfer price is fixed at the transferor's book value
Intra group dividends:
- Eliminate all paid / payable to other entities within the group & received / receivable from other entities within the group