“

”

consolidation and separate

financial statement Presented By:

Karez I. Kareem

Supervised By: Prof.Dr. Mehmet Civan

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

---- 0

son sister brother

Consolidation

AB C

---- 0 ---- 0 ---- 0 ---- 0

---- 0 ---- 0 ---- 0 ---- 0

---- 0 ---- 0 ---- 0 ---- 0

---- 0 ---- 0 ---- 0 ---- 0

---- 0 ---- 0 ---- 0 ---- 0

PARENR COMPANY IAS

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.

.

Definition of Separate Financial

Statements

A 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.

Control

In 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.

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.

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.

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:

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.

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.

Question : 1

Entity 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.

Question : 2

Entity 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.

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:

Entity A Entity B

Carrying Carrying Fair

amount amount value

CU CU CU

Assets 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

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

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

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

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 CU

Assets 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

11,600

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

For two company SME ASME B

Carrying FairConsolidation

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) 3,450

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

1,250800 + 450 + 1,250

Total liabilities and equity 3,000 = 1,250 =

(800) 3,450

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.pdf

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