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Advanced Accounting, copyright by Khoi Dang
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CONSOLIDATED ACCOUNTINGInstructor: Khoi Huy Dang
Contents
Introduction1
Group Accounting2
Methods3
Foreign Transaction4
Introduction
Consolidated Statements
Elimination of Intercompany Transaction
Consolidation of Foreign Operations
Inter-Transaction Exercise
KDGKDG
APLAPL
TYNTYN
LHHLHH
100%100% 100%100%
100%100%
100100
5050
7070
2020 7070
120120
1010
Group Accounting
Why a group?
Ownership and Control
Scope of Consolidation
Methods of Consolidation Full consolidation Equity consolidation Joint-Venture
Ownership and Control
Ownership
Control
Vietnam ownership & control
Ownership …
Controlling Stakes: >50%
60% 20% 60%
5% 40% 33%
10% 10% 20%
Example 1 Example 2 Example 3
A A A
B B B
M M M
And how it controls …
A A A
B B B
M M M
M on B 15% (10+5)M on B 15% (10+5) M on B 40%M on B 40% M on B 55%M on B 55%
control 100%control 100%
control 10%control 10%
control 5%control 5%
control 0%control 0%
control 10%control 10%
control 40%control 40%
control 100%control 100%
control 20%control 20%
control 33%control 33%
Controlling Stakes: >50%
60% 20% 60%
5% 40% 33%
10% 10% 20%
B
M M M
A A A
B B
Scope of Consolidation (1)
Control
Influence
Not in scope
Scope of Consolidation (2)
100% 80% (20% MI)
SUB 1 SUB 2
30%
50%10%S
CO
PE
of
CO
NS
OL
IDA
TIO
N
Co
ntr
ol
MOTHER Co
Infl
uen
ceASSOCIATE
JOINT-VENTURENot in Scope
INVESTMENT
Methods
Full Consolidation
Equity Consolidation
Proportion Consolidation
Methods
100% 80% (20% MI)
SUB 1 SUB 2
30%
50%10%
INVESTMENTNot in Scope
CO
NS
OL
IDA
TIO
N M
ET
HO
D
Fu
ll C
on
soli
dat
ion
MOTHER Co
Eq
uit
y C
on
soli
dat
ion
ASSOCIATE
JOINT-VENTURE
Pro
po
rti
on
al
Co
nso
lid
atio
n
Full Consolidation (1)
M owns 90% of F
BS of M
Assets (M) Equity (M)
5,300 Liabilities (M)
9,100 Investment in F
900 4,700 10,000 10,000
BS of affiliate FAssets (F) Equity (F)
Capital 1,000RE 600
1,600Liabilities (F)
2,500 9002,500 2,500
Full Consolidation (2)
M owns 90% of F
BS of M Consolidated Balance Sheet
Assets (M) Equity (M) Consolidated EquityM 5,300F 540
5,8405,300 Minority Interest
Liabilities (M) 160Liabilities (M)
9,100 9,100Investment in F Assets (F)
900 4,700 4,70010,000 10,000 Liabilities (F)
BS of affiliate F 2,500 900Assets (F) Equity (F) 11,600 11,600
Capital 1,000RE 600
1,600Liabilities (F)
2,500 9002,500 2,500
Assets (M) after droping Investment
in F
Equity Consolidation (1)
M owns 90% of F
BS of M
Assets (M) Equity (M)
5,300 Liabilities (M)
9,100 Investment in F
900 4,700 10,000 10,000
BS of affiliate FAssets (F) Equity (F)
Capital 1,000RE 600
1,600Liabilities (F)
2,500 9002,500 2,500
Equity Consolidation (2)
M owns 90% of F
BS of M Consolidated Balance Sheet
Assets (M) Equity (M) Consolidated EquityM 5,300F 540
5,300 Liabilities (M) 5,840
Liabilities (M)9,100 9,100
Investment in F900 4,700
10,000 10,000
BS of affiliate F 1,440 4,700Assets (F) Equity (F) 10,540 10,540
Capital 1,000RE 600
1,600Liabilities (F)
2,500 9002,500 2,500
Assets (M) after droping
Investment in F
Consolidated Investment
Proportional Consolidation (1)
M owns 90% of F
BS of MRules: 100% mother + % * Child
Assets (M) Equity (M)
5,300 Liabilities (M)
9,100 Investment in F
900 4,700 10,000 10,000
BS of affiliate FAssets (F) Equity (F)
Capital 1,000RE 600
1,600Liabilities (F)
2,500 9002,500 2,500
Proportional Consolidation (2)
M owns 90% of F
BS of M Consolidated Balance Sheet
Assets (M) Equity (M) Consolidated EquityM 5,300F 540
5,300 Liabilities (M) 5,840
Liabilities (M)9,100 9,100
Investment in F900 4,700
10,000 10,000
BS of affiliate F 2,250 5,510Assets (F) Equity (F) 11,350 11,350
Capital 1,000RE 600
1,600Liabilities (F)
2,500 9002,500 2,500
Assets (M) after droping Investment
in F
Consolidated Investment
Exercises
S90% 25%
RE = 60000 B H RE = 30000Result = 16000 Result = 8000
S sold to B 16000 goods (profit/markup 1/3 included), 80% still in Inventory.
Income Statement and Balance Sheet of the company S, B and HIncome Statement and Balance Sheet of the company S, B and H
Foreign Transaction
Translation Adjustment
Khôi Huy Đặng