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All about consolidation of accounts (ca final)

Gourav Kapoor (CA Final Student) (2977 Points)

19 September 2012

1. Consolidation means replacement of investments with net assets of Investee (jisme investment ki jati hai)

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Gourav Kapoor (CA Final Student) (2977 Points)
Replied 19 September 2012

2. Consolidation is required under clause 32 of listing requirements of SEBI.

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Gourav Kapoor (CA Final Student) (2977 Points)
Replied 19 September 2012

3. AS 21 does nt require consolidation of Financial Statement instead it requires process and procedure to be followed for preparing consolidated financial statements.

Gourav Kapoor (CA Final Student) (2977 Points)
Replied 19 September 2012

4. Consolidated Financial Statements includes :

Consolidated Balance Sheet
Consolidated Profit & Loss Account
Consolidated Cash Flow
Consolidated Notes to accounts (Not inculuded in CA Final Course)

Gourav Kapoor (CA Final Student) (2977 Points)
Replied 19 September 2012

5. Clause 32 of SEBI requires CFS for parent company (holding co.) Parent co. will consolidate its subsidiary

Gourav Kapoor (CA Final Student) (2977 Points)
Replied 19 September 2012

6. subsidiary means under control of parent

Meaning of control

i) where parent co. hold more than 50% of the voting power of another co.

or

ii) where parent co. have power to cpmpose governing body of another entity for economic reasons

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Gourav Kapoor (CA Final Student) (2977 Points)
Replied 19 September 2012

7. In India, we apply full consolidation method i.e. net assets not owned in investments are shown in CFS along with minority interest.

Gourav Kapoor (CA Final Student) (2977 Points)
Replied 19 September 2012

8. Imp Definitions :

Minority Interest : Assets which are not purchased in investments but controlled by parent.

Goodwill : Difference btw Cost of investment & net assets of subsidiary on the date of investment

Post Acquisition Profit : means growth in net assets of subsidiary since acquisition of share.

Gourav Kapoor (CA Final Student) (2977 Points)
Replied 19 September 2012

Adjustments

Adj. No. 1 : Treatment of Abnormal items in AOP

Step 1 : Nullify effects of Abnormal items on revenue profit

Ab Gain : decrease revenue profits

Ab. Loss : increase revenue profits

Step 2 : Apply Time Adjustment

Step 3 : Reinstate Abnormal items according to the date of occurance in capital / revenue profits

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All about consolidation of accounts (ca final)

1. Consolidation means replacement of investments with net assets of Investee (jisme investment ki jati hai)

8 Replies

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3. AS 21 does nt require consolidation of Financial Statement instead it requires process and procedure to be followed for preparing consolidated financial statements.

4. Consolidated Financial Statements includes :

Consolidated Balance Sheet

Consolidated Profit & Loss Account

Consolidated Cash Flow

Consolidated Notes to accounts (Not inculuded in CA Final Course)

5. Clause 32 of SEBI requires CFS for parent company (holding co.) Parent co. will consolidate its subsidiary

6. subsidiary means under control of parent

Meaning of control

i) where parent co. hold more than 50% of the voting power of another co.

or

ii) where parent co. have power to cpmpose governing body of another entity for economic reasons

7. In India, we apply full consolidation method i.e. net assets not owned in investments are shown in CFS along with minority interest.

8. Imp Definitions :

Minority Interest : Assets which are not purchased in investments but controlled by parent.

Goodwill : Difference btw Cost of investment & net assets of subsidiary on the date of investment

Post Acquisition Profit : means growth in net assets of subsidiary since acquisition of share.

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