Consolidated financial statements: Concepts, issues and techniques

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<ul><li><p>298 HOOK REVIEWS </p><p>which analyst accounting ratios and, in chapter clevcn, there is a bricfri-sum&amp; ot the history of spreadsheet modclling from the 14th century, followed by .I description of one way in which expert systems can bc incorporated withill spreadsheets in order to enhance performance. </p><p>Throughout the rest of the book, various aspects of AI/ES arc covered, the most interesting from a practitioners viewpoint being the last three chapters (part five) which deal with what lies ahead. </p><p>Overall, I feel this book dots achieve its aims. It is well structured, well written and informative, without the tendency, so often prevalent in books on AI/ES, to overdo the use of technical jargon. I would recommend it to anyone wishing to know more about the potential of AI/ES in the business environment. </p><p>ALAN SANGSTER University qf Aberdeen </p><p>P. A. Taylor CONSOLIDATED FINANCIAL STATEMENTS: CONCEPTS, ISSUES AND TECHNIQUES Harper &amp; Row (London, 1987). 329 pp. Al2.95 (pbk) </p><p>Stimulating reading, a practical aid to teaching and a thoroughly researched state- ment of accounting theory and practice in the area of group accounting methods are all provided by Taylors book. </p><p>The book is divided into three parts. Part one Fundamentals of Group Ac- counting forms a quarter of the text and stands in its own right as a statement of the relevant legal and conceptual issues. Merger and Acquisition accounting methods are treated with equal emphasis. </p><p>Part two, Consolidating the Major Financial Statements, constitutes half of the text, dealing in turn with each of the main accounting statements within the context, primarily, of acquisition accounting. Despite the subject matter at times being highly technical in nature, Taylor does not depart from his avowed intention of reasoning through from first principles and making extensive reference to professional pronouncements, current practice and academic commentaries. </p><p>Perhaps the best chapter in this section is that devoted to the Statement of Source and Application of Funds which provides a model of how to build up, step by step, an explanation of a complex accounting problem. He has clearly exposed the glaring shortcomings of much present-day accounting practice in this area. </p><p>Part three, Other Issues in Group Accounting, makes up the remaining quarter of the text. Consolidated Accounts in Practice is a chapter only for the really enthusiastic, dealing as it does with a number of the more technically complex issues in group accounting. On the other hand, the chapters on Foreign Currency Translation and Segment Reporting and Disaggregation are much more general in nature and can be read independently from the rest of the volume. </p><p>The book is primarily aimed at the undergraduate market and we are left in no doubt that most of the material has been extensively consumer tested. Taylor </p></li><li><p>BOOK REVIEWS 2c)9 </p><p>is a master of the use of diagrams and numerical examples in reinforcing the readers appreciation of the points made in the text. They are invariably pitched just at the right level so that they are neither regarded as trivial nor so complex as to obscure the essential points at issue. </p><p>Those who have attempted to teach consolidated accounting will be acutely aware of the need to find a method of recording the various consolidation adjustments that can be presented clearly in a lecture, that can be used by students for problem-solving exercises, and that is the servant rather than the master of the concepts being applied. In my experience, both the ledger account and traditional consolidation worksheet methods are not totally satisfactory. Taylor has developed a method that he terms the abbreviated vertical cancellation table, for which I see significant advantages over the more traditional methods. If the book were adopted as a class text it would be essential for the lecturer to adopt Taylors form of adjustment recording. </p><p>I have two criticisms of the book as a teaching aid. Firstly, too little emphasis is placed on the presentation of published accounting information. There is a danger that students will be left with the impression that the working notes are sufficient and that the presentation of information in an acceptable form does not really matter. </p><p>Secondly, at various stages in the text problems are set with the aim of testing the readers understanding of the material covered. Invariably, solutions to thcsc problems arc not contained in this volume. I assume the solutions are included in the teachers manual which would not normally be available to students. I can see no reason why these solutions could not be included as an appendix to the volume. </p><p>As a reference book, it suffers because of its very topicality. The period since the introduction of merger relief by the Companies Act 1981 has been one of unprecedented change and development in the area of group accounting. This book has been written in the middle of this changing legal and regulatory environment and in some respects is already out of date. It is to be hoped that it will be revised in due course. </p><p>Nothing in the above criticism should be taken as detracting from this rcview- crs admiration for Taylors achievement in writing a text of the highest quality. This book could fundamentally change the place of group accounting in academic accounting education. In too many universities and polytechnics Group Account- ing has been seen, at best, as a highly technical part of a second-year financial accounting course or at worst as something best left to professional education. Taylor has shown that the subject can be approached in a way that warrants its inclusion as an honours specialism. He has produced a book that, although less comprehensive, ranks alongside Shaws edition of Bogie as one of the best books written in the area. </p><p>PAUL D. GORDON tJrziuerrity ofilhudren </p></li></ul>

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