Difference between various types of investments: subsidiaries, joint arrangements, and associates. Learn how they are accounted for under IFRS and US GAAP. Difference between various types of investments: subsidiaries, joint arrangements, and associates. Learn how they are accounted for under IFRS and US GAAP.
Mastering the art of consolidated financial statements
- Understand the translation of foreign subsidiary financials for consolidated statements. Follow IAS 21 (IFRS) & ASC 830 for guidance.
- Subsidiaries may use local GAAP, but must adjust to IFRS/US GAAP for consolidated financial statements. IFRS/US GAAP require uniform accounting policies, adjustments to subsidiary statements to ensure conformity. This may result in deferred tax recognition due to temporary differences.
- Learn about the preparation of a consolidated statement of cash flows in accordance with IFRS or US GAAP. The statement should reflect only the cash movements of the group and eliminate any intragroup transactions. Transactions with unconsolidated subsidiaries, non-controlling interests, associates, and joint ventures are not eliminated.
- Understand the impact of changes in ownership interest on a subsidiary without loss of control. Read about reattribution of OCI, reallocation of goodwill, non-cash acquisition of NCI, and transaction costs. Get an insight on how these changes are reflected in financial reporting and subsidiary management.
- How to account for business combinations between unrelated parties using the acquisition method under IFRS 3 / ASC 805. Also how to determine whether a subsidiary constitutes a business and what items to include in the consolidated financial statements.
- How business combinations are accounted for when a parent already has an interest in an investee before it becomes a subsidiary. It also describes how goodwill is calculated and provides an illustrative example of how adjustments are made during the measurement period.
- How to manage business combination under common control with two acceptable approaches for accounting for it: the acquisition method and the pooling of interests method. Each method is explained with an example and some criteria for judging the substance of a business combination under common control.
- Non-controlling interest (NCI) in a subsidiary is any equity interest not held by the parent. NCI is presented within equity, separate from the parent's equity, in consolidated financial statements. Measurement of NCI depends on the instrument's classification as equity or liability.
- Understand how a parent company may lose control over its subsidiary and the necessary accounting steps to take when this occurs. Learn how to treat components of OCI and reclassify amounts in equity to profit or loss. Explore an illustrative example of how to account for the full disposal of a subsidiary.
- Recognition and measurement of investments in subsdiaries (and associates and joint ventures) in separate financial statements of parent: acquisition method, fair value, equity method explained and illusatrated by examples