Accounting and consolidating entry


05-Nov-2019 06:39

Consolidated accounts combine the financial statements of separate legal entities controlled by a parent company into a set of financial statements for the entire group of companies.

The concepts explain the advantages and drawbacks of this approach, how to implement it and various measures and success factors.

FASB 141 Disclosure Requirements: FASB 141 requires disclosures in the notes of the financial statements when business combinations occur.

Such disclosures are: When a company purchases 20% or less of the outstanding common stock, the purchasing company’s influence over the acquired company is not significant.

Impairment loss : An impairment loss occurs when there is a decline in the value of the investment other than temporary.

When the amount of stock purchased is between 20% and 50% of the common stock outstanding, the purchasing company’s influence over the acquired company is often significant.

Hi Putting together some management accounts from a company and its holding company, so amalgamating the TBs.

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If other factors exist that reduce the influence or if significant influence is gained at an ownership of less than 20%, the equity method may be appropriate (FASB interpretation 35 (FIN 35) underlines the circumstances where the investor is unable to exercise significant influence).

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Treatment to the acquired company: The acquired company records in its books the elimination of its net assets and the receipt of cash, receivables or investment in the acquiring company (if what was received from the transfer included common stock from the purchasing company).