All about consolidation of accounts (ca final)
Gourav Kapoor (CA Final Student) (2977 Points)
19 September 2012
8 Replies
Gourav Kapoor
(CA Final Student)
(2977 Points)
Replied 19 September 2012
2. Consolidation is required under clause 32 of listing requirements of SEBI.
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
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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