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
Ifrs
Mastering the art of consolidated financial statements
- 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.
- 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 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.
- 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.
- 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.
- Understand the translation of foreign subsidiary financials for consolidated statements. Follow IAS 21 (IFRS) & ASC 830 for guidance.
- Learn about the requirements for preparing consolidated financial statements under IFRS 10 & ASC 810.
- 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.