合并报表会计.ppt

,Click to edit Master title style,Click to edit Master text styles,Second level,Third level,Fourth level,Fifth level,*,Consolidation Method,2,Definitions,AASB 127 Para.4,Consolidated Financial Statements,are the financial statements of a group presented as those of a single economic entity,Group,a parent and all its subsidiaries,Parent entity,an entity that has one or more subsidiaries,Subsidiary,an entity including an unincorporated entity such as a partnership,that is controlled by another entity,3,Nature of consolidated financial statements,Consolidated statements are the combined financial statements for a group.,AASB 3,Business Combinations,Appendix A,business combination,“The bringing together of separate entities or businesses into one reporting entity”,4,Appendix A,business,defined as:,An integrated set of activities and assets conducted and managed for the purpose of providing:,A return to investors;or,lower costs or other economic benefits directly and proportionately to policyholders or participants.,5,The acquisition of an,entity,contrasts with the acquisition of a group of assets.,Accounting for a group of assets is based on AASB 116,Property,Plant and Equipment.,6,Consolidated financial statements,provide information on the financial performance and position of multiple entities which are treated as a single reporting entity.,These statements show only the results oftransacting with parties,external,to the economic entity.,7,Nature of consolidated financial statements,The consolidated financial statements are produced using the information contained in the financial statements of the entities within the economic entity,however,the accounts of the individual entities are,not,affected,The,consolidated financial statements,consist of,:,-Consolidated statement of comprehensive income,-Consolidated statement of changes in equity,-Consolidated statement of financial position.,8,Nature of consolidated financial statements,Who has to prepare consolidated financial statements?,AASB 3 para 17:,“An acquirer shall be identified for all business combinations.The acquirer is the combining entity that obtains control of the other combining entities or businesses.”,9,AASB 3 Appendix A,Reporting entity,-An entity in respect of which it is reasonable to expect the existence of users who rely on the entitys general purpose financial report for information that will be useful to them for making and evaluating decisions about the allocation of resources.,A reporting entity can be a single entity or a group comprising a,parent,and all of its,subsidiaries.,10,Consolidated financial statements,Consolidated financial statements are prepared not just for the shareholders of the parent entity,but also for a range of users-creditors,employees,lenders,financial advisers,analysts.,Reasons for Consolidation,To represent as faithfully as possible the financial position,financial performance and cash flows of a parent and its subsidiaries,Relevant to users,Understandable to users,Compare group to other entities by user,11,Concepts of Consolidation,Entity concept of consolidation,assets and liabilities of parent and subsidiary Non controlling interest(NCI)equity,Parent entity concept of consolidation,assets and liabilities of parent and subsidiary NCI is a liability,Proprietary concept of consolidation,Pro-rata consolidation,based on parents share of subsidiary assets and liabilities,12,Control as the criterion for consolidation,Control-AASB 3 Appendix A,“The power to govern the financial and operating policies of an entity or business,so as to obtain benefits from its activities”.,Subsidiary is an entity that is,controlled,by another entity.,Hence determination of whether one entity controls another is crucial to the determination of which entities should prepare a consolidated financial report.,13,Control,Two parts to the definition:,(,the power criterion)the ability to direct the financial and operating policies of another entity.,(the benefit criterion)the ability to obtain benefits from the other entity.,Passive versus active control may not be actively involved in the management of.,Non-shared control can only be one controlling entity.,14,Contro,l,Level of share ownership,AASB 127 para 13 control is presumed to exist when the parent owns,directly or indirectly through subsidiaries,more than half of the voting power of an entity,i.e more than 50%of the shares of another entity.,Where ownership interest is less than 50%there is less consensus about whether control exists.,15,Existence of effective control,Factors that might indicate the existence of control(AASB 127,par.13)(cont.),Control also exists when the parent owns half or less of the voting power of an entity when there is,power over more than half of the voting rights by virtue of an agreement with other investors;,(b)power to govern the financial and operating policies of the entity under a statute or an agreement;,(c)power to appoint or remove the majority of the members of the board of directors or equivalent governing body and control of the entity is by that board or body;or,(d)power to cast the majority of votes at meetings of the board of directors or equivalent governing body and control of the entity is by that board or body.,.,16,Consolidation adjustments,AASB 127 para 18-31,Combine the accounts of the entities,But subject to 3 types of adjustments:,(i)The substitution elimination entry,(ii)Elimination of inter-entity transactions e.g.sales,and their effects,(iii)Accounting for any Non controlling interest,17,Consolidation adjustments,Consolidation adjustments are,NOT,made in the records of the parent or the subsidiary,but on a,consolidation worksheet,or,in,a,special consolidation journal.,May need to,repeat,certain adjustments every year.,18,Consolidation worksheet format,19,1.The elimination,entry,In effect we:,(i),substitute,the assets and liabilities of the subsidiary for the asset“Shares in S Ltd”that is shown on the parent companys balance sheet,(ii),eliminate,the parent companys interest in the acquisition date equity of the subsidiary,20,P Ltd 80%S Ltd,Assume on,1 July 2004,P Ltd paid$250 for,ALL,the shares of S Ltd.At this date the recorded equity of S Ltd consisted of:,Share capital$150,Retained earnings100,All the net assets of S Ltd are recorded at fair value,The elimination,entry,21,The elimination,entry,Immediately before acquisition,:,P LtdS Ltd,Share capital$200$150,Retained earnings,100,100,$,300,$,250,Cash$50$250,Shares in S Ltd,250,_,-,$,300,$,250,Q,:what are the assets,and equity of the economic entity?,22,The elimination,entry,We,cannot,simply add the financial statements together:,P Ltd,S Ltd,Sum,Share capital$200$150$350,Retained earnings,100,100,200,$,300,$,250,$,550,Cash$50$250$300,Shares in S Ltd,250,_,-,250,$,300,$,250,$,550,23,The elimination,entry,The economic entitys financial position is:,Share capital$200(Capital of P Ltd),Ret.earnings,100,(Ret.earnings of P Ltd),$,300,Cash$300(P Ltd+S Ltd),When adding the financial statements together,we need to make adjustments.,24,The elimination,entry,Adjustments:,(a)Eliminate“Shares in S Ltd”,An entity cannot show shares in itself as an asset.Shares in S cannot appear on the group balance sheet.,(b)Eliminate the equity of S Ltd existing at acquisition date i.e.the pre-acquisition equity,Including both the net assets of S Ltd and the equity accounts of S at the acquisition date would double-count the net assets of S.,25,The elimination,entry,This entry eliminates the,investment account,of the parent entity(“Shares in S Ltd”)and the parent companys,100%interest,in the acquisition-date equity of the subsidiary:,Share CapitalDr150,Retained EarningsDr100,Shares in S LtdCr250,26,P Ltd,S Ltd,Dr,Cr,Consol,Capital,200,150,150,200,Ret.,earnings,100,_,100,_,100,100,_,300,250,300,Cash,50,250,300,Shares in S Ltd,250,-,250,-,300,250,300,27,The elimination,entry,The elimination entry can be prepared using an,acquisition analysis,:,At 1 July 2004,:,FV of net assets of S Ltd =$250 cash,($150,capital,+$100,ret.earn.,),FV acquired by P Ltd =100%x$250,=$250,Cost of acquisition,=$250,Goodwill/Gain on bargain purchase=zero,28,The elimination,entry,Assume in the,2004-5,period that S Ltd records a net profit after tax of$75.These are all,post-acquisition,profits they do not affect the elimination entry.,The consolidated financial statements show only the,post-acquisition,equity of the subsidiary.,ALL pre-acquisition equity of the subsidiary is eliminated on consolidation.,29,P Ltd,S Ltd,Dr,Cr,Consol,Ret.earnings,220,175,100,295,Capital,200,150,150,200,420,325,495,Cash,170,325,495,Shares in S Ltd,250,-,250,-,420,325,495,30,The elimination,entry,The entry at 30/6/05 is:,Retained Profits(1/7/04)Dr100,Share CapitalDr150,Shares in S LtdCr250,At 30/6/06:,Retained Profits(1/7/05)Dr100,Share CapitalDr150,Shares in S LtdCr250,Needs to be repeated in each years worksheet,31,Dividends from pre-acquisition equity,Dividends paid by a subsidiary out of pre-acquisition profits i.e.from the balance of retained earnings existing at the acquisition date,are not,treated as revenue by the parent company but as a reduction of the carrying amount of“Shares in S Ltd”.,NB.P Ltd will never pay a dividend to S Ltd.,Why?,32,Dividends from pre-acquisition equity,Before doing the substitution elimination entry we need to determine if“Shares in S”has been written down by the amount of a pre-acquisition dividend paid by S to P.,Compare the carrying amount of“Shares in S”with the purchase price paid by P.,If“Shares in S”has been written down we must reverse this write-down and bring“Shares in S”back to the original cost.,33,Dividends from pre-acquisition equity,In the books of S the net effect of declaring and paying a dividend from pre-acquisition profits is:,Dr Retained earningsxxx,Cr Bankxxx,In the books of P the net effect of receiving this dividend is:,Dr Bank,xxx,Cr Shares in S,xxx,34,Dividends from pre-acquisition equity,Why doesnt P credit a revenue account with the amount of the dividend?,Because P will treat the dividend as a partial return of the purchase price it paid for its asset“Shares in S”.,To,reverse,the effect of this transaction,:,Dr Shares in Sxxx,Cr Retained profits(opening)xxx,(if dividend was,paid in a previous period,),35,Dividends from pre-acquisition equity,If the dividend was,declared and paid in the,current,period:,Dr Shares In Sxxx,Cr Interim dividend paid*xxx,*a negative appropriation account,36,Dividends from pre-acquisition equity,P owns 100%of S.On 1 June,S declares a final dividend of$30 which will be paid in August.This is recorded:,In S Ltds records:,Dr Final dividend provided 30,Cr Dividend payable30,In P Ltds records:,Dr Dividend receivable 30,Cr Shares in S Ltd30,37,Dividends from pre-acquisition equity,To reverse these entries at date of consolidation:,Dr Shares in S30,Cr Dividend receivable30,Dr Dividend payable30,Cr Final dividend provided30,38,Goodwill,“Goodwill on consolidation”arises when the cost of the investment in a subsidiary is greater than the total fair value of the net assets acquired.It appears only on the consolidated balance sheet.,The elimination journal entry will include a balancing debit to goodwill.,39,Goodwill,Acquisition analysis at 1/7/04:,FV of NA of S Ltd=$150+$100,=$250,Cost of acquisition=$300,Goodwill=$300-$250,=$50,At 1 July 2004,P Ltd paid$300 for ALL the issued shares of S Ltd when the equity of S Ltd was:,Share capital$150,Retained earnings100,40,Goodwill,The elimination entry at 1/7/04:,Retained Earnings Dr100,Share CapitalDr150,GoodwillDr50,Shares in S LtdCr300,41,P Ltd,S Ltd,Dr,Cr,Consol,Capital,200,150,150,200,Ret.earning,100,100,100,100,300,250,300,Cash,-,250,250,Shares in S Ltd,300,-,300,-,Goodwill,50,50,300,250,300,42,Goodwill,30/6/05,Dr Impairment Loss5,Cr Accumulated Impairment Losses 5,Remember the elimination entry will also have to be done.,The directors determine that goodwill has been impaired by$5 on 30/6/05,43,Gain on bargain purchase,This arises when the purchase price of the investment is,less,than the total fair value of the net assets acquired.,Before gain on bargain purchase is recognised,AASB 3 requires that the acquirer shall reassess the procedure to ensure there is a gain.,44,Gain on bargain purchase,On 1/7/04,P Ltd paid$273 for the shares of S Ltd when the records of S Ltd showed:,Capital$150Land$200,Retained earnings,150,Plant,100,$,300,$,300,All assets are recorded at fair value,45,Gain on bargain purchase,Acquisition analysis at 1/7/04:,FV of net assets of S Ltd=$150+$150,=$300,Cost of acquisition =$273,Gain on bargain purchase =$27,46,Gain on bargain purchase,Substitution elimination entry at 1/7/04:,Ret EarningsDr150,Share CapitalDr150,Excess(P&L)Cr27,Shares in S LtdCr273,