...Meaning: The combined financial statements of a parent company and its subsidiaries. Definition of 'Consolidated Financial Statements’: Consolidated financial statements are the combined financial statements of a company and all of its subsidiaries, divisions, or suborganizations. Explanation: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge the overall health of an entire group of companies as opposed to one company's stand alone position. A consolidated financial statement gives investors a clear view of a corporation's global activities. A consolidated financial statement typically combines a company's operating activities with data from its subsidiaries. A consolidated financial statement helps an investor, a regulator or a corporation's top management evaluates the true financial standing of the corporation. A consolidated financial statement also may indicate an entity's financial position or cash flows during a period. Meaning of 'Consolidated Financial Statements’: Let's assume Company XYZ is a holding company that owns four other companies: Company A, Company B, Company C, and Company D. Each of the four companies pays royalties and other fees to Company XYZ. At the end of the year, Company XYZ's income statement reflects a large amount of royalties and fees with very few expenses -- because they are recorded on the subsidiary income statements. An investor looking...
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...year life at acquisition date, was sold on 1 January 2009. At 1 July 2007, Chu Ltd had an unrecorded patent with an indefinite useful life. On that date, Kwok Ltd measured the fair value of the patent at $8 000. By 30 June 2009, it was assessed that $2,000 of the patent was not recoverable. At 1 July 2007, Chu Ltd had not recorded a liability relating to a guarantee that was considered to have a fair value of $7,000. An amount of $5 000 was paid by Chu Ltd on 26th June 2009 in part payment of this liability. The balance of this liability was still considered to be $2,000 at 30 June 2009. At 1 July 2007, Chu Ltd had not recorded any goodwill. Valuation adjustments are made on consolidation and, on realisation of a business combination valuation reserve, a transfer is made to retained earnings on consolidation. (b) During the 2007-2008 year, Chu Ltd transferred $5,000 to its General Reserve from profits earned prior to acquisition date. (c) For the year ending 30 June 2008, the profit after tax for Chu Ltd was $17,000 from which a dividend of $5,000 was paid in that year. (d) The debentures were issued by Chu Ltd at nominal value on 1 July 2008, and are redeemable on 30 June 2013. Kwok Ltd acquired its holdings ($60 000) of these debentures on the open market on 1...
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...23 Consolidation: controlled entities ACCOUNTING STANDARDS IN FOCUS LEARNING OBJECTIVES IFRS 10 Consolidated Financial Statements After studying this chapter, you should be able to: 1 explain the meaning of consolidated financial statements 2 discuss the meaning and application of the criterion of control 3 discuss which entities should prepare consolidated financial statements 4 understand the relationship between a parent and an acquirer in a business combination 5 explain the differences in disclosure requirements between single entities and consolidated entities. CHAPTER 23 Consolidation: controlled entities Prepared for Rotterdam School of Management 429 813 INTRODUCTION The purpose of this chapter is to discuss the preparation of a single set of financial statements, referred to as the consolidated financial statements. The preparation of consolidated financial statements involves combining the financial statements of the individual entities in a group so that they show the financial position and financial performance of the group of entities, presented as if they were a single economic entity. The first issue covered in this chapter is the determination of which entities are required to prepare consolidated financial statements. This involves a discussion of the criterion for consolidation and its application to economic situations. The second issue in this chapter is the accounting procedures for preparing the consolidated financial...
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... | |CONSOLODATION: | |US GAAP vs IFRS | | | | | For decades the US financial market has stuck to accounting rules known as the Generally Accepted Accounting Principles, commonly abbreviated as U.S. GAAP, or simply GAAP. Just less than a year ago, there was the groundbreaking elimination of GAAP requirement for International Financial Reporting Standards (IFRS) reporting foreign issuers, due to a strong global support for IFRS. Then on August 27th 2008, the Securities Exchange Commission voted to publish for public comment a proposed Roadmap that could lead to the use of International Financial Reporting Standards (IFRS) by U.S. issuers beginning in 2014. Currently, U.S. issuers use U.S. Generally Accepted Accounting Principles (U.S. GAAP). The Commission would make a decision in 2011 on whether adoption of IFRS is in the public interest and would benefit investors. The proposed multi-year plan sets out several milestones that, if achieved, could lead to the use of IFRS by U.S. issuers in their filings with the Commission (Navigating). The transition from U.S. GAAP...
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...standards of reporting. To ensure an efficient audit this memo will discuss the treatment of share-based payments as well as the accounting for consolidations relating to SPE’s. This will help in an effort to provide the best services possible to our clients. Client’s Consistency with GAAP Our company shall note that we shall conduct audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards demand that we make sure our audited material is free of misstatement. Throughout the audit we must plan and perform to acquire a reasonable outcome of the financial statements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. The audit also includes evaluating the accounting principles used and important estimates made by management as well as appraising the financial statement presentation. The basis for our opinion relies on a reasonably based audit. Accounting Consolidation Theory A technique used in financial accounting is termed consolidation which combines a group of companies' financial statements into one. This is beneficial because if offers a view of the whole company’s financial state. This gives the auditors a chance to see how combinations of the companies are performing. Accounting Consolidation is used when a corporation owns 50% or more of another company. The technique of consolidating accounting records is handled by combining...
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...time (Camfferman and Zeff, 2006). In 1993, Daimler Benz AG aimed to list on the New York Stock Exchange (NYSE); hence, it needed to reconcile its financial statements to comply with US Generally Accepted Accounting Principles (US GAAP). Under German GAAP, the firm had re- ported a net income of 615 million Deutschmarks (DM) for the 1992 year, which turned into a net loss q We are grateful to Luis Fernández-Revuelta and Mikel Tapia for their helpful comments on earlier drafts of this paper. This project is partially funded by the Spanish Ministry of Education’s research Grant # SEJ2007-67582-C02-01. * Corresponding author. Tel.: +34 91 568 96 00; fax: +34 91 561 09 30. E-mail addresses: salvador.carmona@ie.edu (S. Carmona), marco.trombetta@ie.edu (M. Trombetta). 0278-4254/$ - see front matter Ó 2008 Elsevier Inc. All rights reserved. doi:10.1016/j.jaccpubpol.2008.09.003  456 S. Carmona, M. Trombetta / J. Account. Public Policy 27 (2008) 455–461 of DM1, 839 million under US GAAP (see also Ball (2004)). On November 15, 2007, the US Securities and Exchange Commission (SEC) allowed the operation of foreign private firms using International Financial Reporting Standards1 on the NYSE without first reconciling their financial statements to US GAAP. The financial press enthusiastically greeted this move; on November 19, 2007, the Financial Times wrote: ‘‘The goal of a single worldwide accounting language has long been a dream. Today it is fast becoming a reality—and the pace is picking...
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...TB EXAM QUESTIONS Chapter 1 True False 1.Napoleon found the Italian system of accounting to be inefficient. 2.Venice’s commerce was driven by sea traffic. 3.The Genoese system was the first to imply that unlike items could be compared in terms of a common monetary unit. 4.Double entry bookkeeping quickly had world-wide acceptance, as the British accepted it in the 1400s. 5.When hyperinflation exists, alternative systems to historical cost become necessary. 6. The International Accounting Standards Board, an international organization dedicated to the diversity of accounting standards worldwide. 7. One trend in European securities markets is consolidation. 8. The continental accounting system is closely linked to the tax collection system. 9. The first step into international business is usually the creation of a foreign subsidiary. 10. If a firm is not involved in international commercial transactions, knowledge of international business is unnecessary. Multiple Choice Learning Objective #1.1: Identify the key trends in the development of accounting through history 1. The Crusades were important in the development of accounting, because __a. the Arabs first developed double entry accounting, which was then adopted by the Italians. __b. the Christians needed double entry accounting to keep track of the relative profitability of the different Crusades. __c. the trade routes shifted the commercial center from Italy to Constantinople ...
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...influences, which can be contributed in completing this goal. The most significant factor is compliance with the accounting governing bodies, such as GAAP (Generally Accepted Accounting Principles). As an accounting firm, it is vital to examine your financial statements on a constant basis. You will need to look for the accounting handling of share-based payment and accounting consolidation theory, as it pertains to special purpose entities and consolidations (Schroeder, Clark, & Cathey, 2011). Share-Based Payments are another way for a publicly held company to offer compensation to his or her employees or other parties, without using the company’s assets. These compensation awards are usually a set number of stocks within the organization. There was already a system in place to account for these transactions, but a revision to the Statement No. 123 was made in 2004. This statement was geared toward Share-Based Payments and was released December 16, 2004, with the original Statement being published in 1995. This revision was created to provide more accurate financial information to users of publicly traded entities, such as our client. Costs incurred by share-based transactions are now to be disclosed on the company’s financial statements as an expense. The share-based transactions can be made with the company and either an employee or another party. These transactions can be settled in various ways. Some of these ways include settlement through cash, other assets of the company...
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...International Financial Reporting Standards (IFRS) MBA 691: Managerial Accounting Professor: Prepared by: April 19, 2009 Bibliography: • Ernst & Young, “U.S. GAAP vs. IFRS: The basics”, January 2009. • Securities & Exchange Commission, “Roadmap for the Potential Use of Financial Statements Prepared in Accordance with International Financial Reporting Standards by U.S. Issuers”, www.sec.gov/spotlight/ifrsroadmap.htm (Release No. 33-8982; November 14, 2008). • The Association of Chartered Certified Accountants (ACCA), “Impact of IFRS in Europe”, www.accaglobal.com/publicinterest/activities/research/reports/global_integration/, October 7, 2008. • Internal Auditor, magazine, “Getting Up To Speed with IFRS’, October 2008. • International Accounting Standards Board, “IASB Responds to G20 Recommendation and US GAAP Guidance’, www.iasb.org/News/Press+Releases/IASB+Responds+to+G20+Recommendations+and+US+GAAP+Guidance.htm, April 7, 2009. • EU Finance Ministers Statement, www.eu2009.cz/en/news-and-documents/news/statement-by-the-informal-ecofin-15621/ , April 4, 2009. • National Association of Corporate Directors (NACD) – Directors Monthly article, “IFRS – What The Board Needs to Know”, http://www.deloitte.com/dtt/cda/doc/content/us_assur_IFRS_DM%20Sep08_20080911pdf.pdf, September 2008. • Deloitte, www.deloitte.com/us/debates/IFRS. • Deloitte, “IFRS Conversion: Front or back...
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...Financial reporting developments A comprehensive guide Consolidated and other financial statements Revised November 2013 Noncontrolling interests, combined financial statements, parent company financial statements and consolidating financial statements To our clients and other friends This Financial reporting developments (FRD) publication is primarily designed to help you understand financial reporting issues related to the accounting for noncontrolling interests. This publication also includes interpretive guidance on consolidation procedure and on the presentation of combined, parentonly, and consolidating financial statements. The publication reflects our current understanding of the relevant guidance in these areas, based on our experience with financial statement preparers and related discussions with the FASB and SEC staffs. The accounting for noncontrolling interests is based on the economic entity concept of consolidated financial statements. Under the economic entity concept, all residual economic interest holders in an entity have an equity interest in the consolidated entity, even if the residual interest is relative to only a portion of the entity (that is, a residual interest in a subsidiary). Therefore, a noncontrolling interest is required to be displayed in the consolidated statement of financial position as a separate component of equity. Likewise, the consolidated net income or loss and comprehensive income or loss attributable to both controlling...
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...Introduction 1 1.1 Economics of F&N Holdings Berhad 1 2.0 The Users of Financial Statements and Their Information Needs 4 3.0 Discussion of Standards Related to Consolidation and its Actual Presentation 6 4.0 Conclusion 14 Reference 16 List of Diagrams Exhibit 1 Group Structure & Summary of Ownership Interests in Subsidiary Exhibit 2(a) Disclosure of Ownership Interest in Subsidiaries Exhibit 2(b) Disclosure of Ownership Interest in Subsidiaries Exhibit 3 Consolidated and Separate SOPL Exhibit 4 Consolidated and Separate Statements of Comprehensive Income Exhibit 5(a) Consolidated SOFP Exhibit 5(b) Separate SOFP Exhibit 6 Consolidated SOCIE Exhibit 7 Separate SOCIE Exhibit 8 Consolidated and Separate SOCF Exhibit 9 Disclosure about Reporting Date Exhibit 10 Acquisition Method of Business Combinations Exhibit 11 Comparisons of Investment in Subsidiaries of 2 years Exhibit 12 Goodwill as Intangible Assets and Computations Exhibit 13(a) Goodwill Recognized on Acquisition Date Exhibit 14 Goodwill shown in Intangible Assets Exhibit 15 Investment in A Joint Venture Exhibit 16 Equity Method of Joint Venture Exhibit 17 Adjustments to CSOFP for MFRS 11 Adoption Exhibit 18 Adjustments to CSOCIE & CSOCF for MFRS 11 Adoption Exhibit 19 Adjustments to SOFP, and SOCF for MFRS 11 Adoption Exhibit 20 Summary of Financial Information...
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...transmission, or broadcast for distance learning. STUDENT EDITION ISBN: 978-1-61853-151-3 Bookstores & Faculty: to order this book, call 800-619-6473 or email customerservice@cambridgepub.com. Students: to order this book, please visit the book’s Website and order directly online. Printed in Canada. 10 9 8 7 6 5 4 3 2 1 PREFACE W elcome to Advanced Accounting. We wrote this book with two major objectives in mind. First, we seek to reflect the changing topical emphases and content in the advanced accounting course; coverage is completely updated for new developments concerning applicable reporting issues and requirements, including the newest FASB and GASB pronouncements and proposals. We extensively discuss International Financial Reporting Standards where appropriate throughout the book. Second, we write from the perspective of enhancing teachability; many of the topics in this course are complex and require careful explanation. We highlight the major issues in...
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...Deloitte United States Services Audit & Enterprise Risk Services Consulting Financial Advisory Services Tax Deloitte Growth Enterprise Services Featured Services Industries 2014 Industry Outlook Aerospace & Defense Automotive Banking & Securities Consumer Products Federal Government Health Care Providers Health Plans Insurance Investment Management Life Sciences Media & Entertainment Oil & Gas Power & Utilities Process & Industrial Products Real Estate Retail & Distribution State Government Technology Telecom Travel, Hospitality & Leisure Insights Deloitte University Press Browse by Content Type Browse by Role Innovation Centers Email Subscriptions Careers About Press Events Alumni Clients Contact Global > United States > About > University Relations > Deloitte Foundation Global site selector Go Search Search Top searches Top searchesBookmark Email Print this page Increase font Alliances Catalyst for Innovation Community Involvement Corporate Responsibility Deloitte’s sponsorship of the U.S. Olympic Committee Inclusion Deloitte University Ethics & Independence Deloitte Life Growth Through Acquisition History Investor Confidence Leadership University Relations Deloitte Foundation Faculty Resources Faculty and Ph.D. Support Life, Inc. Student Events The Trueblood Case Studies DOWNLOAD For a complete index of Cases and Addendum summary please click the download button above. The Trueblood Series cases...
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...Date: April 12, 2010 To: James Bluff From: Boat Cai Subject: key disclosure issues for financial statements [pic] Dear Mr. Bluff As requested, I’ve done a further research on the four items arisen and found out the disclosure requirements for each of them including errors correction, events after reporting date, recognition criteria of provision and classification of financial instruments. I also went through the financial statements and found out some omissions. Finally, due to changes in the operation in our company, I identify some challenges in financial reporting and disclosure. Four key items and their disclosure requirements 1. Correction of errors As you probably know the inaccurate calculation of actuarial loss on defined benefit assets in 2005 would led to overstate plan assets, this would finally affect the recognition of a liability or an asset for superannuation in our financial position in 2005. If the amount of this error is material, it needs to be corrected. The definition of “materiality” is defined in AASB 1031. Due to this error that happened prior to the comparative period, here is some information on changes in errors I would like to mention. With IAS 8, the error must be corrected by both: • Restating comparative amounts in the reporting period which discover the error; • Adjusting the opening amount of financial position in the last reporting period and stating as comparative information (para.42). There is a short list for...
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...spearse@clemson.edu Required Materials: Text: Hoyle, J. B., Schaefer, T. F, and Doupnik, T. S. Advanced Accounting, 12th ed. (custom print with ConnectPlus access), McGraw-Hill Create, ISBN: 9781308536347. Software: McGraw-Hill Connect Plus Course Description Study of specialized aspects of financial reporting, including business combinations and emerging practices and developments in financial accounting. Prerequisite: Enrollment in the MPAcc program. Course Objectives and Learning Outcomes Students completing this course will demonstrate knowledge and understanding of the financial reporting framework used by business enterprises as it relates to partnerships, variable interest entities, and parent and subsidiary companies. Specifically, you will learn the accounting procedures and reporting requirements for: partnership formation, operation, cessation and liquidation; the treatment of variable interest entities, and combining corporate entities; and the preparation of consolidated financial statements for domestic parents with domestic and foreign subsidiaries. Methods of Assessing Expected Learning Outcomes Multiple choice questions, open-ended problems, and short answer questions will be used to assess knowledge of accounting procedures, reporting requirements and problem-solving skills. Grade Scale Contribution to final grade A 90 - 100% Exam I ...
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