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
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Chapter 11: Highlights 1. For a variety of reasons, corporations often acquire the securities (bonds, preferred stock, common stock) of other entities. For example, a business may invest (in the short term) some of its excess cash in income-yielding securities such as bonds or stocks. A business may also invest in securities intending to hold them for a longer period. 2. The accounting for investments in securities depends on the expected holding period and the purpose of the investment
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Variable Interest Model ..................... 2 Voting model ..................................... 3 Navigating through the Variable Interest Model ............................... 3 1. Does a scope exception to consolidation guidance (ASC 810) apply? ....................... 4 2. Does a scope exception to the Variable Interest Model apply? .... 4 3. Does the enterprise have a variable interest in a legal entity? ............................... 6 4. Is the legal entity a VIE? .............. 8 5. If the
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Chapter 6 Variable interest entities, Intra-entity Debt, Consolidated Cash flows, and Other Issues Chapter Outline I. Variable interest entities (VIEs) A. VIEs typically take the form of a trust, partnership, joint venture, or corporation. In most cases a sponsoring firm creates these entities to engage in a limited and well-defined set of business activities. For example, a business may create a VIE to finance the acquisition of a large asset. The VIE purchases the asset using
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chapter The Equity Method of Accounting for Investments The first several chapters of this text present the accounting and reporting for investment activities of businesses. The focus is on investments when one firm possesses either significant influence or control over another through ownership of voting shares. When one firm owns enough voting shares to be able to affect the decisions of another, accounting for the investment can become challenging and complex. The source of such complexities
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Chapter 1 the equity method of accounting for investments Answers to Questions 1. The equity method should be applied if the ability to exercise significant influence over the operating and financial policies of the investee has been achieved by the investor. However, if actual control has been established, consolidating the financial information of the two companies will normally be the appropriate method for reporting the investment. 2. According to Paragraph 17 of APB Opinion 18, "Ability
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Chapter 5 Consolidated Financial Statements Intra-entity Asset Transactions Chapter Outline I. The transfer of assets between the companies forming a business combination is a common practice. The opportunity for such direct acquisition (especially of inventory) is often the underlying motive for the creation of the combination. II. Intra-entity inventory transfers A. The individual accounting systems of the two companies will record the transfer as a sale by one party and as a purchase
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Chapter 5 Consolidated Financial Statements Intra-entity Asset Transactions Chapter Outline I. The transfer of assets between the companies forming a business combination is a common practice. The opportunity for such direct acquisition (especially of inventory) is often the underlying motive for the creation of the combination. II. Intra-entity inventory transfers A. The individual accounting systems of the two companies will record the transfer as a sale by one party and as a purchase
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www.pwc.com Guide to Accounting for Variable Interest Entities 2012 This publication has been prepared for general information on matters of interest only, and does not constitute professional advice on facts and circumstances specific to any person or entity. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information
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PART 7: ACCOUNTING FOR EQUITY INTERESTS IN OTHER ENTITIES Chapter 24 Accounting for group structures 1. The consolidated financial statements provide an aggregation of the financial statements of a group of separate legal entities to provide financial statements drawn up to reflect a perspective of the group as a single economic entity. Therefore, the purpose of providing consolidated financial statements is to show the results and financial position of a group as if it were operating as a single
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