Methodology for preparing a consolidated statement of financial position. Report consolidation procedure. Trading securities are stated at fair value

When preparing a consolidated balance sheet, you must:

a) sum up the indicators of assets and liabilities of the balance sheets of the main (parent) company and subsidiaries;

b) balance sheet indicators characterizing mutual settlements and obligations of the main (parent) company and the group’s subsidiaries should be eliminated (mutually excluded) and not reflected in the consolidated balance sheet;

c) investments of the main (parent) company in subsidiaries and authorized capital subsidiary company in the part contributed by the main company are also mutually exclusive and not reflected in the consolidated balance sheet;

d) if the investment of the main (parent) company in a subsidiary is less than 100% of the authorized capital (par value ordinary shares) of the latter, then in certain indicators of the consolidated balance sheet, highlight the minority share - in proportion to the share of the main shareholders (investors) of the subsidiary in its authorized capital.

These listed operations are performed only during the preparation of a consolidated financial statements and are not reflected in accounting registers accounting neither the main (parent) company nor subsidiaries. None consolidated accounting registers are not being carried out. As part of the explanatory note to the consolidated financial statements, the main (parent) company provides a breakdown of its investments in the context of each dependent company.

The reporting consolidation procedure includes calculations for the following main aspects:

Consolidation of capital;

Consolidation of balance sheet items related to intragroup settlements and transactions;

Consolidation of financial results from intra-group sales of products (works, services);

Reflection of dividends of the main (parent) company and subsidiaries in the consolidated financial statements.

In special economic literature Some authors propose capital consolidation to be carried out various methods depending on the structure of the authorized capital and the conditions for the redemption of shares of the subsidiary by the main (parent) company.

If the parent company has a subsidiary with 100% participation in its authorized capital, then when compiling a consolidated balance sheet, the liability item “Authorized capital” of the subsidiary and the asset item “Investments in subsidiaries” of the parent company are completely mutually exclusive. Accordingly, the consolidated balance sheet does not contain indicators for the items “Investments in subsidiaries” and “Authorized capital of a subsidiary”. The authorized capital of the consolidated balance sheet is equal to the authorized capital of the main (parent) company.

The interests of the subsidiary's shareholders (minority interest) must be reflected in the consolidated balance sheet. For subsidiaries The minority interest represents a source of funds for the group’s financing and is reflected in the liability side of the balance sheet as a special item of the same name in the “Capital and Reserves” section.

The minority share of a subsidiary, as a rule, includes two components - part of the authorized capital of the subsidiary, corresponding to the share of third-party shareholders in it, and part of the additional, reserve capital, retained earnings and all other sources of the subsidiary's own funds, proportional to the share of third-party shareholders in the authorized capital.

Let's look at examples of techniques for drawing up a consolidated balance sheet in different versions.

Example 25. Shipping company “M 1” (parent organization) owns 51% of the ordinary shares of the subsidiary “D 1” from the moment of registration and commencement of the latter’s activities. The reported balance sheets are presented in table. 28.

Table 28

Reporting balances of companies “M 1” and “D 1” at the end of the year, thousand rubles.

a) the minority share in the equity capital of subsidiary “D 1” is calculated:

The authorized capital is 0.49 x 20,000 thousand rubles. = 9800 thousand rubles;

In additional capital 0.49 x 13,000 thousand rubles. = 6370 thousand rubles;

In reserve capital 0.49 x 5000 thousand rubles. = 2450 thousand rubles;

In retained earnings 0.49 x 1000 thousand rubles. = 490 thousand rubles.

Total 19,110 thousand rubles.

Amount 19,110 thousand rubles. is shown as a separate line in the liability side of the consolidated balance sheet under the item “Minority Interest”;

b) investments of the parent company in the authorized capital of the subsidiary in the amount of 10,200 thousand rubles. eliminated by general rule capital consolidation. The authorized capital of the consolidated balance sheet is equal to the authorized capital of the parent company (see Table 28);

c) the group’s share in the remaining elements of the subsidiary’s equity capital is:

The authorized capital is 0.51 x 20,000 thousand rubles. = 10,200 thousand rubles;

In additional capital 0.51 x 13,000 thousand rubles. = 6630 thousand rubles;

In reserve capital 0.51 x 5000 thousand rubles. = 2550 thousand rubles;

In retained earnings 0.51 x 1000 thousand rubles. = 510 thousand rubles.

Total 19,890 thousand rubles.

During consolidation, these amounts are added to the corresponding indicators of the parent company.

The consolidation procedure and the consolidated balance sheet of the group are presented in table. 29.

There are also cases when a parent organization acquires shares of a subsidiary at a price different from the par value of the latter's shares. Then the preparation of the consolidated balance sheet begins with determining the book value of the equity capital (ordinary shares) of the subsidiary, which is reflected in the liability side of the balance sheet in Section III “Capital and Reserves”.

Subsequently, the amount of investment of the parent organization in the subsidiary is compared with the book value of the equity capital of the subsidiary (or its share owned by the parent company).

If the parent's investment is greater than the book value of the subsidiary's equity, then the corresponding difference is called “Goodwill arising on consolidation (firm price or goodwill of subsidiaries).” This difference can be reflected in the consolidated balance sheet using one of two methods:

a) by adjusting the asset on the group’s consolidated balance sheet.

Table 29

Worksheet for preparing a consolidated balance sheet

Consolidation of capital.

The parent company (“M 1”) owns 51% of the ordinary shares of the subsidiary (“D 1”)

In this case, the excess of the purchase price over the book value of the subsidiary's equity is reflected in Section I “Non-current assets” of the consolidated balance sheet. By its economic nature, goodwill arising upon consolidation is an intangible asset. In the consolidated balance sheet, it can be reflected under a specially introduced article “Goodwill arising during consolidation (company price or business reputation of a subsidiary)”;

b) by adjusting the liabilities of the group's consolidated balance sheet. When using this method, such excess is subtracted from book value equity capital of the group's consolidated balance sheet.

If the parent organization's investments are less than the book value of the subsidiary's equity capital, then the corresponding difference between the purchase price and the book value of the subsidiary's equity capital will be negative and is reflected in the consolidated balance sheet as a separate line as a reserve (profit) arising upon consolidation (in the liability section of Section III “Capital and reserves").

The authorized capital of both the parent organization and the subsidiary may consist of ordinary and preferred shares.

The value of preferred shares issued by the parent company is reflected in full on the consolidated balance sheet ( section III"Capital and reserves").

If the parent company owns all the preferred shares of a subsidiary, then during consolidation, indicators reflecting the parent company's investment in such shares and the authorized capital of the subsidiary in the part corresponding to the value of its preferred shares are mutually excluded.

An important methodological aspect of reporting consolidation may be the reflection of intragroup settlements and transactions in the consolidated balance sheet.

Various business transactions and current settlements are carried out between the companies of the group, which are reflected in the balance sheets of the relevant companies in the form of: debts of the founders for contributions to the authorized capital; advances issued and received; loans; accounts receivable and payable of the group company; purchases (sales) of other assets between group companies; expenses and income of future periods; accruals (for example, dividends), etc.

When drawing up a consolidated balance sheet, these intra-group settlements both between the main (parent) company and subsidiaries, and between subsidiaries of the same group must be mutually exclusive. This requirement is based on the fact that the consolidated statements reflect the financial and economic relationships of the group only with third parties.

Mutually exclusive items can be both in the asset balance sheet of one company of the group and in the liability balance sheet of another company.

For organizations preparing consolidated statements, it is especially important to comply with the requirements of accounting regulations, including:

Preventing the collapsed reflection of items on accounting for settlement transactions;

Implementation of the procedure for settlements of parent (parent) organizations with their subsidiaries, approved by the Ministry of Finance of the Russian Federation, using account 79 “Settlements with subsidiaries (dependent) companies”, subaccount “Settlements with subsidiaries” (Order of the Ministry of Finance of the Russian Federation No. 112). This account is intended to summarize information on all types of settlements (except for settlements on contributions to the authorized capital) of the parent organization with its subsidiaries and subsidiaries with the parent organization.

Intra-group turnover for sales of products (works, services) have a significant impact on the indicators of the consolidated statement of financial results.

When preparing consolidated financial statements, two cases must be distinguished:

At the end of the reporting year, one company of the group sold products (work, services) to another company of the same group, and the latter then fully sold these products to consumers outside the group (third parties);

At the end of the reporting year, one company of the group sold products (work, services) to another company of the same group, and the latter did not sell (in whole or in part) these products to third parties.

In the first case, when consolidating financial results, the profits (losses) of the group companies are summed up. At the same time, the consolidated statement of financial results of the group does not include revenue from sales of products (works, services), reflecting intra-group turnover, and related costs.

In the second case, the problem of consolidating reporting becomes more complicated when the products that make up the intragroup turnover remain unsold in the reporting year (or are partially sold). If we consider the group as a whole, then such products are not sold, they are reflected as inventories in the balance sheet of the group company, and the profit received by one of the companies when selling products to another company is the unrealized profit of the group. When preparing the consolidated income statement, unrealized gains are excluded from the group's total profit (loss) for the reporting period.

When compiling the consolidated balance sheet of the group, the retained profit (loss) of the reporting year (obtained according to the general rule by summing up similar indicators of the group companies) is reduced by the amount of unrealized profit; in the asset, the value of inventories (previously obtained according to the general rule by summing up similar items on the balance sheets of the group companies) is reduced by the amount of unrealized profit. This is due to the fact that unrealized profits are reflected in the inventories of the parent company.

The methodology for preparing consolidated statements in the presence of unrealized profits in inventories at the end of the year becomes more complicated when a subsidiary that has sold its products to other companies of the group (including the parent company) has a minority interest. IN in this case From unrealized profits in inventories, it is necessary to separate out the group's share and the minority's share. To solve this problem when preparing consolidated reporting, various methods are used in international practice. Example 26 below uses the following method. In the consolidated statement of financial performance, all unrealized gains are excluded from group profit. In the assets of the consolidated balance sheet, the value of inventories is also reduced by the entire amount of unrealized profit. In the liability side of the consolidated balance sheet, the portion of unrealized profit corresponding to the share owned by the group is excluded from the group's retained earnings. The minority interest excludes the other portion of unrealized profits attributable to the minority interest.

Example 26. The parent company “M 2” owns 75% of the ordinary shares of the subsidiary “D 2” from the moment of registration and the start of the latter’s activities. At the end of the year, the inventories of the M 2 company include goods purchased from the D 2 company for 8,000 thousand rubles. The costs of production and sale of these goods for the company “D 2” amount to 6,000 thousand rubles.

The reporting balances of the companies are presented in table. thirty.

Reporting balance sheets of companies “M 2” and “D 2” at the end of the year

Table 30

When preparing a consolidated balance sheet:

1) unrealized profit in inventories is determined:

8000 thousand rubles. - 6000 thousand rubles. = 2000 thousand rubles;

2) the group’s share in the profits and reserves of the subsidiary is established:

In the authorized capital 0.75 x 40,000 thousand rubles = 30,000 thousand rubles;

In additional capital 0.75 x 10,000 thousand rubles. = 30,000 thousand rubles;

In reserve capital 0.75 x 5000 thousand rubles. = 3750 thousand rubles;

In retained earnings 0.75 x 5000 thousand rubles. = 3750 thousand rubles.

3) the part of unrealized profit corresponding to the share owned by the group is determined:

0.75 x 2000 thousand rubles. = 1500 thousand rubles;

4) the retained profit of the group is reduced by the amount of unrealized profit corresponding to the share owned by the group:

3750 thousand rubles. - 1500 thousand rubles. = 2250 thousand rubles;

5) the indicators of additional and reserve capital defined in clause 2 and the adjusted amount of retained earnings (clause 4) of the subsidiary, group-owned, are summarized with the corresponding indicators of the parent company and reflected in the consolidated balance sheet;

6) the minority interest in the subsidiary is calculated:

The authorized capital is 0.25 x 40,000 thousand rubles. = 10,000 thousand rubles;

In additional capital 0.25 x 40,000 thousand rubles. = 10,000 thousand rubles;

In reserve capital 0.25 x 5000 thousand rubles. = 1250 thousand rubles;

In retained earnings 0.25 x 5000 thousand rubles. = 1250 thousand rubles.

Total 22,500 thousand rubles;

7) unrealized profit in inventories attributable to the minority interest is calculated:

0.25 x 2000 thousand rubles. = 500 thousand rubles;

8) the minority share calculated in clause 6 is reduced by the corresponding part of the unrealized profit:

22,500 thousand rubles. - 500 thousand rubles. = 22,000 thousand rubles.

The adjusted amount is reflected in a separate liability item on the consolidated balance sheet “Minority Interest”;

9) the value of the group’s reserves (consolidated balance sheet asset) is reduced by all unrealized profit in reserves in the amount of 2,000 thousand rubles;

10) investments of the parent company in the authorized capital of the subsidiary in the amount of 30,000 thousand rubles. are eliminated according to the general rule of capital consolidation.

The calculations made above (items 1 - 10) are presented in table. 31.

The authorized capital of the consolidated balance sheet is equal to the authorized capital of the parent company (80,000 thousand rubles), and the calculated amount of retained earnings (2,000 thousand rubles) is reflected in the consolidated balance sheet as a separate line (see Table 31).

Based on example 26 in the consolidated income statement for reporting year The group's profit, taking into account unrealized gains in inventories, is as follows:

The profit of the parent company “M 2” is 10,000 thousand rubles.

Profit of subsidiary company “D 2” in share,

belonging to the group 3750 thousand rubles.

Total 13,750 thousand rubles.

The group's share of profits not derived from the sale of inventories is excluded.

(unrealized profit of the group) 1500 thousand rubles.

Retained earnings of the group 12,250 thousand rubles.

The amount of retained earnings considered in this way is reflected in the consolidated balance sheet (see Table 31).

In addition to the situations considered in examples 25 and 26, the relationship between group enterprises may concern

Table 31

Worksheet for preparing a consolidated balance sheet at the end of the year

Reflection in the consolidated balance sheet of unrealized profits in inventories.

The parent company (“M 2”) owns 75% of the ordinary shares of the subsidiary (“D 2”)

also purchases (sales) of property between group companies, payment of premiums, fines and penalties in accordance with business agreements, etc. Such mutual other income and expenses are not reflected in the consolidated statements.

One of the independent issues of consolidation of financial statements may be the reflection in it of dividends of the parent company and subsidiaries.

Part of the profit of the main company can be formed from dividends paid by subsidiaries. In the statement of financial results of the main company, these dividends are shown in the line “Income from participation in other organizations”.

Since the payment of dividends by subsidiaries to the parent company is a redistribution of profits within the group, it is necessary to exclude re-accounting when preparing the consolidated statement of financial results. For this purpose, the consolidated statements do not take into account dividends paid by subsidiaries of the parent company.

If a parent company owns 100% of the common stock of a subsidiary, then the following rules should be followed when preparing a consolidated statement of financial results:

Dividends paid by a subsidiary to a parent company should not be counted twice in group profits and are therefore not reflected in the group's consolidated accounts;

The only type of dividends shown on the consolidated income statement are dividends paid by the parent company.

If the parent company owns less than 100% of the subsidiary's common stock, then part of the subsidiary's dividends is paid to the parent and the other part is paid to the subsidiary's outside (minority) shareholders. Dividends paid by a subsidiary to third party shareholders are included in the group's consolidated financial statements, as are dividends from the parent.

Therefore, dividends paid do not require an adjustment to the consolidated balance sheet.

If the parent company declares the payment of dividends, then in the consolidated balance sheet the declared dividends are included in current liabilities under a special item “Dividends declared by the parent company” and at the same time excluded from the retained earnings of the group.

If the payment of dividends was declared by a subsidiary with a minority interest, then in the consolidated balance sheet dividends in the part attributable to the minority interest are reflected in short-term liabilities under the special item “Declared minority dividends” and at the same time excluded from the liability item “Minority interest”.

Instructions

profits And losses profits profits And losses.

Align the Report information profits And losses according to Form No. 2 according to Form No. 1, which are at odds at the end of the reporting period due to non-reflection of dividends. To do this, in line 190 of form No. 2 “Net profit/loss of the reporting period,” you must enter a value that is equal to the difference between the data at the end and beginning of the reporting period, line 470 of form No. 1, increased by the amount of dividends paid.

note

For example, based on the results of the first half of the year, an interim dividend in the amount of 500 rubles was paid. per share. Russian legislation prohibits the declaration and payment of dividends to companies that are insolvent or may become so after payment of dividends, as well as in the event of losses in annual balance sheet society.

Helpful advice

Dividends also include any income received from sources outside the Russian Federation that are classified as dividends in accordance with the laws of foreign countries. Not recognized as dividends This means that if the Company does not keep accounting records double entry, then such a Company does not have the right to pay dividends, since the size of net assets cannot be determined without balance sheet data.

Sources:

• reflection of dividends
• Reflecting debts on the balance sheet

Increasing popularity in our world along with the development and emergence of new economic relations acquire all kinds of transactions with dividends. In view of this, accordingly, more and more questions arise about the mechanism for their accounting, as well as about the reflection of all kinds of transactions with them in accounting. The question of how to reflect dividends, namely how to reflect tax on dividends.

Instructions

Determine the tax rate for dividends. At the same time, the Tax Code of the Russian Federation establishes certain figures. Yes, for foreigners legal entities the rate is 15%, for individuals who are not residents of the Russian Federation – 30%. In turn, for Russian enterprises, as well as individuals residents of the Russian Federation, the tax rate for dividends will be 9%.

Calculate the tax amount. To determine the amount of tax, it is necessary to multiply the tax rate by the difference between the amount of dividends that were accrued for receipt and payment. At the same time, you need to know that the amount of tax will be reduced by subtracting from this amount all accrued dividends the amount of dividends accrued to legal entities and individuals who are not residents of the Russian Federation. And it increases due to the amount of dividends received by the company. You should be aware that there is no tax liability on dividends, if the amount of dividends received is less than the amount accrued for payment. Remember also that when calculating dividends for each category of persons (residents, non-residents), the appropriate tax rate established by tax legislation is applied.
Report tax on dividends in .

Accrue dividends for participants Dt 84 – Kt 70 or for Dt 84 – Kt 75-2.
Reflect in the documents the tax withholding for dividends for participants Dt 70 – Kt 68 or for Dt 75-2 – K 68.
Reflect in accounting the payment of dividends for Dt 70 – Kt 50/51 or, respectively, for Dt 75-2 – Kt 50/51.
If you, or rather yours, received news of the accrual of dividends, you need to make an accounting entry Dt 76 - Kt 96, which reflects the amount of accrued dividends. it is this figure that will be decisive, thanks to this amount it increases accounting profit and this does not affect taxation in any way, since the amount of tax on dividends was withheld by the tax agent. This way, you will have a positive one every time.

Make an accounting entry Dt 51 – Kt 76 for the amount of dividends paid by the tax agent. This will create a debit balance, which will need to be closed by posting Dt 91 - Kt 76, which will allow the formation of a negative difference between the accounting and tax accounting.

For any participant in a business company or shareholder, one of the most important events is the receipt of dividends. This is an indicator that the funds invested in the investment object are generating income. Dividends are part of the profit distributed to investors, which is subject to tax upon payment. Profits are distributed after shareholders approve the annual financial statements.

You will need

• - shares of domestic or foreign organization.

Instructions

Receipts received from a domestic or foreign organization are reflected in tax and accounting records in different ways. In accounting, dividends are operating income as income associated with participation in the charter of another organization. Based on the temporary assumption of certainty of the facts of economic activity, they should be reflected on the day the decision on payment is made on an accrual basis.

In tax accounting, dividends must be included in the tax base for tax as non-operating income by the date of receipt of funds to the organization’s current account, regardless of the method of accounting for income and expenses used by the taxpayer. When receiving income in the form of property from equity participation in organizations, the date of receipt is considered to be the day on which the acceptance certificate was signed.

When receiving dividends from a foreign organization, the tax amount is determined by the taxpayer independently. IN tax base the entire amount of dividends that are due to be received is included in full, and whether it was withheld under the laws of that country does not matter. The amount of tax paid cannot be higher than the amount of tax payable by the domestic organization. To confirm payment of tax by a non-resident organization, confirmation is required tax authority the state where the organization paying dividends is registered.

If the organization paying dividends itself receives income from equity participation in another organization, the tax subject to withholding is calculated in a different manner. Then, from the total amount to be distributed, those dividends that are payable to the foreign organization are deducted. Afterwards it is calculated between the amount of calculations and the amount of dividends received tax agent for the current reporting period. If the difference turns out to be positive, then the obligation to pay tax is applied to it, and if the rate is negative, there is no obligation to pay tax.

note

Financial statements must be provided to shareholders 60 days after the end of the reporting year.

Helpful advice

If the company's shareholder is a shareholder investment fund, then tax on income from the payment of dividends is not withheld, since such an organization is not a legal entity.

Every year, an enterprise is faced with the need to pay dividends to its participants and auctioneers. After making all the necessary calculations, the accountant needs to reflect dividends and taxes on them in the statements. Accounting depends on who the dividends are given to and at what rate.

Instructions

Check out chap. 23 and chapter 25 Tax Code RF, which establishes the procedure for calculating dividends. These payments are reflected in accounting and reporting according to the rules of PBU 9/99.

Calculate the tax imposed on dividends. To do this, first determine the rate on them. For individuals and legal entities who are residents of the Russian Federation, it is set equal to 9%. For non-resident individuals the rate is 30%, and for foreign enterprises – 15%. The tax amount is determined by multiplying the rate by the amount of dividends paid.

Reflect the accrual of dividends in the financial statements. Since dividends are calculated from the retained earnings of the enterprise, their accrual will be reflected in the debit of account 84. In their correspondence there will be account 70 “Settlements with personnel for wages"or account 75.2 "Settlements for the payment of income with the founders." Withheld taxes are posted on the credit of account 68 “Calculations for taxes and fees”.

Payment of dividends is reflected depending on the method used. If in cash, then account 50 “Cash” is used, if by bank transfer, then account 51 “Current account”. If the company received dividends on shares of another organization, then such income is reflected in the debit of account 76 “Settlements with different debtors and creditors" and the credit of account 96 "Reserves upcoming expenses».

Attribute dividends receivable to other income of the enterprise as such profit arises, in accordance with the terms of the agreement or other supporting document. All transactions for the distribution of dividends are reflected in the financial statements, including tax period when they happened. In other words, on the date of the decision to pay dividends by the meeting of participants of the enterprise.

Sources:

• dividend report

Tip 5: How to show dividends on your income statement

Report on profits And losses, filled out in Form No. 2, is the second most important accounting report of the enterprise, after the balance sheet. It reflects the success of the organization’s economic activities based on the results of the reporting period. Reflection of dividends in this report is a special procedure for an accountant.

You will need

• - Form No. 2 “Profit and Loss Statement”.

Instructions

Draw up the minutes of the meeting of founders, at which the decision was made to accrue dividends in accordance with the accounting policy of the enterprise, as well as an accounting certificate that reflects the amounts paid. Calculate the value net profit, which will be used to pay dividends. Use the Chart of Accounts and Accounting Regulations to reflect this transaction in accounting.

Reflect in the accounting records the accrual of dividends on the debit of account 84 “Retained earnings” and the credit of account 75 or 70. In the first case, the income is received by the founders of the enterprise and third-party auctioneers, and in the second - by employees who own shares of the organization. Calculate income tax and reflect it in certificate 2-NDFL and on sheet 3 Tax return.

Read clause 21 of PBU 4/99 “Accounting” to prepare a Report on profits And losses. It should reflect the calculation of the enterprise's net profit for the reporting period. Show the amount of interim dividends in the Statement of profits and loss in the line “Current income tax” in parentheses with a minus sign. In this case, an entry is made in accounting with a credit to accounts 70 or 75 and a debit to account 99 “Profits and losses.” Accrual of dividends at the end of reporting periods, according to new forms accounting statements for 2011, do not reflect in the Report on profits And losses.

Align the Report information profits And losses according to form No. 2

The essence of consolidated financial statements. Basic Concepts and Ideas

Summary (consolidated) financial statements (CFO)– the financial statements of the group presented as a single company.

Group– the totality of the parent company and all its subsidiaries.

Subsidiary- a company under the control of the parent.

Net assets of the company is the difference between the book value of assets and liabilities. When compiling the CFR, it is necessary to take the fair value of net assets for calculation.

Goodwill (or business reputation) is the difference between the value of the company as a whole, that is, the price actually paid, and the fair value of the net assets owned by the investor.

Minority share is that portion of a subsidiary's net results of operations and net assets that is attributable to interests that the parent does not own directly or indirectly through subsidiaries.

Control– the ability to manage the financial and economic policies of the company in order to obtain benefits from its activities.

The fundamental concept in consolidation theory is "company group" . A group arises when certain types of activities and lines of business are not combined into a single enlarged company, but are conducted through several companies, each of which remains legally independent. However, the legal independence of each company does not mean their economic independence. For example, if one company owns shares of another company in an amount sufficient to have a majority of votes at a shareholder meeting, then this means the possibility of making any decisions regarding the second company, including the removal and appointment of its directors. This gives the first (parent) company the ability to completely control the business of the second (subsidiary) company. Collectively, the parent company and all of its subsidiaries form a group under the control of the parent company.

Concept control is key when answering the question whether two companies can be considered parent and subsidiary, respectively. Control is defined as the ability of a parent company to direct the financial and operating policies of a subsidiary in order to obtain certain economic benefits. At the same time, the parent company, while controlling the subsidiary, is responsible for the results of its activities.

As a rule, control implies ownership, i.e. direct or indirect ownership of more than 50% of the voting power (shares with voting rights) of a subsidiary. International standards (IFRS 27) provide other criteria for the presence of control, in particular:

Policy – ​​the ability to direct the financial and operating policies of a subsidiary in accordance with the charter or legislation;

Board of Directors – the ability to appoint or remove the majority of members of the board of directors;

The main idea behind the CFR is that it presents the entire group (including both domestic and foreign subsidiaries) as if it were a single entity. That is why this principle of generating consolidated reporting is called “full consolidation”. The functions of forming the CFO are assigned to the parent company. Exceptions from general rule: The parent company is exempt from the obligation to provide the CFO if it itself is fully or practically fully (more than 90%) owned by another company. In addition, in some cases, subsidiaries are not included in the group for which the CFI is formed: this applies to subsidiaries acquired and held with a view to their subsequent resale in the near future, or operating under strict long-term restrictions that significantly reduce their ability to dispose of their assets .

Consolidation Methods

The form of the business combination or investment is reflected in the consolidation methods, which under IFRS include full consolidation, proportionate consolidation and the equity method.

Full consolidation proceeds from the fact that the group is a single economic Education, in which all net assets of subsidiaries are subject to consolidation (priority of control over ownership), and minority rights are reflected as a liability on the consolidated balance sheet. Used for subsidiaries formed as a result of an acquisition or merger.

is the generally accepted method of preparing consolidated financial statements for joint ventures. Its difference from full consolidation is that it is not controlled assets that are consolidated, but only those that the participant in the joint project actually owns. Of course, in this case the minority interest is not present in the consolidated statements. Participation in joint activities (assets, liabilities, income, expenses) can be shown in the participant’s reporting either together with other similar assets, liabilities, income and expenses, or as separate items.

The equity method is used to account for investments in associates. Such investments are initially (at the time of investment) reflected at their par value, with goodwill arising as the difference between the par value of the investment and the investor's share in the net assets of the associated company. Subsequently, changes in the investor's share of net assets, as well as impairment of goodwill, are reflected in the consolidated balance sheet with profit and loss accounts. It should be noted that the associate is not part of a group, so intra-group elimination does not apply and the group's share of the associate's accumulated profits since the investment is shown separately from the group's accumulated equity.

International financial reporting standards describing the procedure for compiling financial statements

As of January 1, 2005, the following standards and interpretations (SICs) defining the consolidation procedure are in force:

IFRS 27 Consolidated Financial Statements and Accounting for Investments in Subsidiaries;

PKI-12 "Consolidation - Companies special purpose";

PKI-33 "Consolidation and the equity method of accounting - potential voting rights and distribution of dividends of owners."

IFRS 31 Joint ventures

IFRS 28 Accounting for Investments in Associates;

PKI-3 "Elimination of unrealized profits and losses on transactions with associated companies";

IFRS 24 Related Party Disclosures;

IFRS 3 Business Combinations.

Table 1

Fair assessment

IFRS 3 requires assets, liabilities and equity instruments acquired in a business combination to be remeasured at fair value, that is, at the amount as if the transaction had been between knowledgeable, willing parties in an arm's length transaction. To do this, an appropriate revaluation of assets must be carried out.

In most cases, the fair value of fixed assets is determined by an independent appraiser. If this is not possible due to the nature of the object, for example, rare equipment that has no analogues on the market, then it is necessary to proceed from the discounted value of future income from its use.

To estimate work in progress, you must additionally exclude the cost of completing the work. Raw materials are valued at current market acquisition cost, or replacement cost.

To establish fair value finished products The parent company must use sales prices without taking into account the amount of costs for its future sale and profit margins.

For long term accounts receivable, mutually beneficial contracts and other accountable assets, the acquirer must use the present value of the amounts received, determined at the relevant current interest rates excluding provisions for bad debts and the cost of debt repayment. However, for short-term receivables, discounting is not required since the difference between nominal and discounted amounts is immaterial.

Thus, for financial instruments traded in an active market, the acquirer must use current market quotations. For non-trading instruments - the estimated market value multiplied by coefficients taking into account expected dividends, growth rates of similar instruments in other organizations and a number of other criteria.

Tax requirements and obligations - in accordance with the rules prescribed in IFRS 12 “Income Taxes”.

To evaluate accounts payable and debt on bills of exchange, obligations, accruals and other requirements for payment (except for short-term ones), the discounting method is used.

When assessing contingent liabilities(those that may arise during the merger of two companies, but arise or are clarified only after the transaction, for example, obligations related to court decision) the acquirer must use the amounts that are likely to be received by the third party as satisfaction of the obligation. This amount should reflect all expectations from possible cash flows.

Valuations are carried out by specialized appraisers. This procedure takes time, while the standard allows for one year from the date of acquisition of the business. If reporting needs to be done and the assessment has not been completed, interim approximate indicators should be used.

For example, an organization acquired a business in May and the valuation was not completed in December, but reporting is required. In this situation, management decides how to temporarily record the assets: at partial valuation results, in accordance with management's own rough estimate, or simply at residual value. This fact is disclosed in the explanatory note so that the user knows that the allocation of the purchase price between assets and goodwill is temporary and will be corrected in the next period when the valuation is completed.

Thus, since the difference between the acquisition cost of a subsidiary and the market value of its net assets is recorded as goodwill, temporary differences in the valuation of assets may only affect its amount.

Example 1. Company A has the following assets: fixed assets - 1200 million rubles, inventories - 150 million rubles, accounts receivable - 330 million rubles, cash 540 million rubles. The company's liabilities amount to 770 million rubles, capital – 1450 million rubles.

Company A buys the assets of Company B, which consist of land and buildings residual book value 300 million rubles, as well as machinery and equipment residual value at 220 million rubles. Company B also has inventory with a book value of 70 million rubles. and outstanding liability for long-term loan, in the amount of 100 million rubles.

The parties agree that company A will acquire fixed assets at their market value for 580 million rubles, reserves - for 60 million rubles. and will pay for these assets by entering into loan agreement with the bank (100 million rubles) and cash in the amount of 540 million rubles.

In its individual statements at the time of acquisition, Company A reflects fixed assets at the cost of acquisition (RUB 580 million), inventories (RUB 60 million), and debt to credit institutions in the amount of RUB 100 million. and payment Money in the amount of 540 million rubles.

Instead of separately purchasing all of the assets and liabilities of Company B, Company A can acquire B entirely by purchasing 100 percent of its shares. The acquisition price in our example will be conditionally the same - 540 million rubles. In its separate statements, Company A in this case reflects financial investments in the amount of 540 million rubles. and payment of funds. When preparing consolidated financial statements, it needs to reflect the acquired assets and liabilities. Only first, in accordance with the acquisition method, it will have to revalue them at market value on the date of acquisition. Then include in the consolidated statements and exclude intra-group turnover, that is, financial investments and capital of company B against each other. This process is shown in Table 2.

table 2

Goodwill

Goodwill is goodwill acquired in a business combination, which consists of payments to the acquiring company as potential economic benefits acquired by the organization in the future, which are difficult to gradate at the purchase stage and separately recognize in the financial statements.

In other words, goodwill, or goodwill, is the difference between the price paid to purchase a business and the market value of its net assets. In this case, there is positive goodwill. If the market value of the company is higher than the price, negative goodwill is formed.

In the general sense of the word, goodwill is a set of intangible factors that allow a company to have certain competitive advantages in business. With these privileges, she will be able to generate additional income and cash flows. Such intangible factors include:

• corporate name of the company;
• reputation in the market;
• technological and management culture;
• the presence of established relationships with counterparties, etc.

The listed factors can be positive or negative (for example, the inability of management to solve problems of relationships with regional political and economic elites). In the first case, the company has positive goodwill, in the second - negative goodwill.

IFRS 3 requires an annual revaluation of goodwill. In addition, the company is required to test goodwill for impairment on an annual basis. In effect, this means that the value of the subsidiary should be tested annually using the same method by which the acquisition price was determined, namely, by discounting the cash flows from the activities of the enterprise in order to compare current value from the original and determine whether goodwill should be partially or fully written off. If the discounted value is higher than the original price paid, then everything is in order, the company is developing better than planned at the time of acquisition. If it is lower, then the condition is worse than expected, and goodwill should be partially written off to the amount of the real value of the enterprise at the time of reporting.

Despite the fact that the standard does not directly impose restrictions on the party undergoing the valuation for the purpose of reflecting it in financial statements, the rules of investment ethics, which have become significantly stricter recently, recommend that the valuation of both fixed assets and intangible assets was carried out by an independent party (specialized appraiser). In accordance with IFRS 3, at the date of acquisition of a company, an organization must: recognize the goodwill of the acquired company in the IFRS statements and measure goodwill at its cost.

Example 2. Let’s say the cost of acquiring company B is not 540, but 600 million rubles, that is, company A is ready to pay more than just the market value of assets, since it also counts on other competitive advantages of its acquisition. At the same time, for convenience of comparison, in order not to change the total values ​​of assets and liabilities, we will change the value of the receivables indicator of company A.

At the same time, in the consolidated financial statements, the group’s capital is still equal to the capital of company A, the assets of company B are still reflected at market value, and the excess of the value of net assets (RUB 60 million) is shown in the consolidated statements as goodwill (Table 3) .

Table 3

In the event of negative goodwill, the acquirer must first reassess the measurement of the acquired assets and liabilities (Table 3), and if the difference cannot be offset in this way, it is recognized as profit at the time of acquisition.

Let's assume that in our example, the purchase price of company B is 500 million rubles. In this case, negative goodwill is formed - 40 million rubles. (RUR 500 million – RUR 540 million) Table 4 shows that the group's capital is still equal to the capital of Company A, and negative goodwill is recognized as profit (shown in equity).

Table 4

In accordance with the requirements of IFRS 3, goodwill is not amortized, but is tested for write-down. Testing is carried out in accordance with the requirements of IFRS 36 “Impairment of Assets”.

Minority share

If an enterprise acquires not 100 percent of the shares of another enterprise, but only a controlling stake, the algorithm for reflecting the acquisition in the reporting changes somewhat. When excluding intragroup turnover (the net assets of a subsidiary are reduced by the financial investments of the parent), it is necessary to remove only that part of them that accounts for the share purchased by the enterprise. The remaining portion of net assets not owned by the entity is reclassified as minority interest.

Example 3. Let's assume that company A acquired not 100 percent of company B for 600 million rubles, but 60 percent for 360 million rubles. Accordingly, company A received 324 million rubles. net assets of the subsidiary (60% x 540,000,000 rubles), that is, it “overpaid” 36 million rubles for its share. The assets of company B are still reflected in the CFO at market value, but taking into account the fact that in addition to company A, other, external shareholders participate in its capital. Thus, the minority share in the net assets of company B, expressed at market value, will be RUB 216 million. (40% x 540,000,000 rub.), (Table 5).

Table 5

The principle of priority of content over form applies here. This principle provides for the priority of relations of economic control (content) over property relations (form), and therefore exactly 580 million rubles. fixed assets and 60 million rubles. inventories must be shown as an asset on the consolidated balance sheet. But at the same time, property controlled by the group, but owned by minority shareholders of the subsidiary (RUB 216 million), should also be reflected in the balance sheet: it is shown in liabilities and is called a minority share.

We see that the minority interest represented on the liability side of the consolidated balance sheet is calculated by multiplying the net asset value of the subsidiary by the minority ownership percentage.

The allocation of a minority interest as a separate item also occurs when preparing a consolidated income statement. First, consolidated profit is calculated, and then (in a separate section of the report) it is shown how much of this profit belongs to the parent company and how much belongs to minority shareholders.

In a consolidated balance sheet The minority interest in the net assets of a subsidiary is shown as a separate line item after the parent's equity. In this case, the minority share in net assets at the date of merger consists of the following components:

• the amount at the date of acquisition calculated in accordance with IFRS 3;
• minority interest in share capital movements from the date of acquisition.

The results of operations of the subsidiary are included in the consolidated financial statements from the date of acquisition. The acquisition date is the date on which control of the acquired subsidiary effectively passes to the acquirer. The date of acquisition and the date of disposal are determined to be the point at which control is transferred. They are not necessarily the same as the legal date of acquisition or the date of sale.

Minority interest may be negative if net assets are negative or the subsidiary has made a loss.

Subsidiaries: full consolidation

As stated above, one company controls another if:

• owns (by right of ownership) more than 50 percent of shares with voting rights;
• actually controls more than 50 percent of the shares with voting rights;
• has the ability to determine the composition of the board of directors;
• can determine the financial and economic policy of the company based on legislative act or agreements;
• has the right to represent a majority of votes at meetings of the board of directors or similar governing body (see “Indicators of Control of a Company”).

Signs of control over a company

Company A buys 51 percent of Company B and, accordingly, receives the right to 60 percent of the votes at the shareholders' meeting. Company A has control even though 40 percent of the voting power is in the hands of another company.

Company A owns 100 percent of a defense company. The government appoints the directors of the enterprise. In this case, Company A does not have control because the government-appointed directors may not allow its management policies to be carried out.

Obtaining control by agreement

Company B buys 30 percent of the voting shares foreign company. The other shareholders, who own 25 percent of its shares, intend to give Firm B the right to manage their investment by agreement. In accordance with this document, Firm B receives shareholder votes. In this case, she gains control of the company.

Control based on legislation

Company A is a gas supplier. The government controls all sales tariffs and purchase prices for gas. So the government controls financial policy of firm A and therefore controls the company.

Company A acquires 30 percent of the company's shares. Its capital structure gives Company K 80 percent of the votes at shareholder meetings. Company K has control even though 70 percent of the shares are in the hands of other shareholders. For example, the remaining shares are diluted among a large number of private investors, so 30 percent of the shares is enough to exercise control over the company.

Company A owns 42% of the voting shares of Company B. In addition, it owns options to purchase 9% of the shares of Company B expiring December 10, 2005 and bonds of Company B convertible into 3% of common shares (conversion period from February 10 to May 31, 2006 .). Then on January 1, 2006 there is no control, but from February 10, 2006 it will appear.

Situations often arise when a company does not have formal legal evidence of control over another company, but in reality control is present. This arises in cases where the controlled company is created as a so-called special purpose entity and, in accordance with the memorandum of association or other document, has significant restrictions on the implementation of transactions or cannot conduct transactions at all without prior approval the company exercising control. Such special purpose entities are subject to mandatory consolidation in accordance with IFRS 27 and IFRS 12 Consolidation – Special Purpose Entities, although it may be difficult to obtain evidence that the reporting entity has such entities, which significantly complicates the preparation and audit of group financial statements.

Buying company

When a new combined entity is created, one of the pre-existing companies must be identified as the "buyer" based on existing characteristics.

In some cases, it is very difficult to determine the purchasing company. IFRS 3 suggests using several criteria for this.

Criterion 1 . The fair value of one company's net assets is significantly greater than the other. In such cases, the first company will be the buyer.

The fair value of the net assets of Company M is 100 million rubles. Company M merges with company L, the fair value of whose net assets is 5 million rubles. Since Company M is larger, it is the buyer.

Criterion 2 . A business combination occurs through the exchange of common voting shares for cash or other assets. In such cases, the buyer is the firm transferring the cash or other assets.

Company C merges with another company. In a merger, C pays $50 million for shares in another company. Thus, C is the buyer.

Criterion 3 . A business combination leads to the fact that the management of one company receives an advantage in the selection of management personnel for the organization resulting from the merger. In such a case, the dominant undertaking will be the acquirer.

The fair value of Company D's net assets is RUB 100 million. It merges with Company A, whose fair value of net assets is RUB 120 million. The directors and managers of Entity D will manage the association. In this case, D is the buyer.

Criterion 4 . The company issuing the shares is usually the buyer in a business combination through a share exchange. A "repurchase" involves the acquisition of shares of the acquiring company.

To obtain a listing of securities on the stock exchange, a large private company organizes its sale to a smaller company whose shares are already listed (hereinafter referred to as BC and MC). MK, registered on the stock exchange, buys BC. BC shareholders buy MK shares. The BC Directorate exercises control over the MC. MK then buys BC by purchasing shares issued by BC during additional issue. This acquisition method is called "repurchase". MK is legally the parent company, but BC is the buyer, as it dictates the financial and business policies of MK.

Criterion 5 . The party that determines the financial and economic policy is recognized as the buyer.

It is also necessary to take into account which of the organizations initiated the merger, as well as the assets of which of the companies predominate in the total amount of assets.

Purchase cost

The buyer must determine the cost of the combination. This aggregate value assets transferred to him in exchange for control over it, and any costs directly related to the merger. These may include costs for professional services of accountants, lawyers, appraisers and other experts.

The cost of the merger includes the amount of liabilities of the acquired company; future costs or losses that the entity expects to incur as a result of the combination are not liabilities and are therefore not included in the cost of the combination.

Production costs financial obligations(for example, bonds) are also not included in the cost of the merger. They reduce the proceeds from the issue of bonds (IFRS 39 Financial Instruments: Recognition and Measurement).

Sometimes the merger agreement provides for future-event-based adjustments in value. The buyer must include it in the cost of the merger on the date of purchase. But provided that there is a probability of such an adjustment, and its magnitude can be reliably estimated.

Procedures for compiling the CFO

When compiling the CFR, the financial statements of the parent and subsidiary companies are combined line by line by adding similar items of assets, liabilities, capital, income and expenses. In order for the consolidated financial statements to present financial information regarding the group as a single company, the following must be observed:

• The carrying amount of the parent's investment in each subsidiary and the parent's portion of the equity of each subsidiary are eliminated under IFRS 3;
• Minority interest in the net income of consolidated subsidiaries for the reporting period is calculated and used to adjust group profit to reflect the amount of net income attributable to the owners of the parent company;
• minority interest in the net assets of consolidated subsidiaries is calculated and reported on the consolidated balance sheet as part of the parent's shareholders' equity;
• for minority interest in net assets, consists of the amount at the date of the initial combination, which is calculated in accordance with IFRS 3, and the minority share of changes in the entity's equity that have occurred since the date of the combination;
• Tax liabilities arising from the distribution of profits are accounted for in accordance with IFRS 12 Income Taxes.

Conditions for drawing up the CFO

When compiling the CFR, a number of conditions must be ensured that relate to the combined financial statements of the parent and subsidiary companies.

First condition is that intra-group balances, intra-group transactions, and unrealized gains from such transactions must be eliminated in their entirety.

In addition to the requirement to exclude intra-group inter-balance sheet settlements from the CFR, it is necessary to exclude significant unrealized profits from intra-group and inter-group transactions included in the carrying amount of assets, such as inventories and fixed assets.

Most typical example An intra-group transaction may be the sale of goods by one of the enterprises of the group to another enterprise of the same group. Sales are reflected in the financial statements of each participant in the transaction (balance sheet and profit and loss account), and this adequately characterizes economic essence relations between two independent organizations. But if you look at the state of affairs from the perspective of the group as a whole, the essence of the events that took place will look completely different. The fact is that both enterprises are within the group, and therefore, from the point of view of the group, there was no sale, only a simple transfer of inventory from one division to another.

Consequently, all of the above consequences of the transaction must be excluded from the CFO (but, of course, preserved in the reports of each individual enterprise). This procedure is called elimination (exclusion) of intragroup transactions.

All debt relations between elements of the group are subject to elimination, since from the point of view of a “single enterprise,” the debt of one division to another should not in any way affect the claims and obligations of the enterprise as a whole. The above applies not only to debts arising as a result of trade transactions, but also to credit operations(including both principal and interest), as well as accrued dividends.

Second condition is that for information purposes the financial statements of the parent company and subsidiaries drawn up for the same year should be used reporting date. In the event that the reporting date of the financial statements of a subsidiary does not correspond to the reporting date of the financial statements of the parent company, in order to prepare the QFR, the subsidiary must specifically prepare its financial statements on the same date as the group, i.e. at the reporting date of the parent company. In case of practical impracticability of preparation additional reporting on the reporting date of the parent company, then when compiling the CFR, it is allowed to use financial statements as of different dates, provided that the gap between the reporting dates does not exceed three months. However, adjustments must be made to take into account the impact of significant transactions or other events that occurred between these dates. At the same time, it will be very difficult to justify such practical impracticability - the very concept of control implies that the parent company is able to obtain from the subsidiary all the information it needs.

Third condition is to use uniform accounting policies for similar transactions and other events in similar conditions. A group's financial statements can only be consolidated if the accounting policies are the same for all members of the group. International accounting standards require appropriate adjustments to be made in order to achieve consistency in the accounting policies used in the CFR.

Fourth condition concerns the reflection in the KFO of the indicators of subsidiaries acquired or disposed of in the reporting period. The results of a subsidiary's operations are included in the CFR from the date of acquisition of the subsidiary, that is, from the date control of the acquired company is effectively obtained, in accordance with IFRS 3 Business Combinations. The results of operations of a divested subsidiary are included in the consolidated income statement until the date of disposition, that is, the date the parent loses control of the subsidiary. In this case, the difference between the proceeds from the disposal of the company and the carrying amount of its assets less liabilities at the date of disposal is recognized in the consolidated income statement as the result of the disposal of a subsidiary.

In order to ensure comparability of financial statements for different reporting periods, information is additionally disclosed on the impact of the acquisition and disposal of subsidiaries on the financial position of the group as at the date of preparation of the consolidated statements, the results for the reporting period and the corresponding amounts for the previous period.

When control over a subsidiary is lost, investments in it are accounted for in accordance with IAS 39 as financial instruments, from the date on which it ceases to meet the definition of a subsidiary but does not become an associate in accordance with IAS 28 Accounting for Investments in Associates. The carrying amount of the investment on the date that the company ceases to be a subsidiary is then treated as the actual cost of the financial investment in that company.

A subsidiary is not subject to consolidation when simultaneously the following conditions are met:

The company itself is a wholly owned subsidiary, or the owners of a minority share agree not to require a CFO;

The Company does not itself have publicly traded securities;

Did not submit financial statements for the purposes of public offering of securities on stock market as an issuer;

Its parent company discloses its consolidated financial statements under IFRS.

Associated companies: equity method of accounting

Associates, in accordance with IFRS 28 Accounting for Investments in Associates, are entities that are under significant influence of the investor and are not controlled or jointly controlled entities. The presence of a significant influence is confirmed by the fulfillment of quantitative and qualitative criteria. Quantitative criteria include, for example, whether the investor directly or indirectly (through other companies) owns more than 20% of the company's voting shares.

Qualitative signs of significant influence:

• representation on the board of directors or other management body;
• participation in the adoption process management decisions in company;
• the presence of significant transactions between the investor company and the investee company;
• exchange of senior management employees between controlled and controlling companies;
• exchange of important technical information between the controlled and controlling companies.

For associates, the equity method is usually used.

Equity method– a method in which an interest in an associate is initially recorded at cost and then adjusted for changes in the investor's portion of the associate's net assets that have occurred since the acquisition

This method allows investments to be reflected on the balance sheet at their acquisition cost. At the same time, an adjustment is made for the investor's share of the profit received by the associated company after the acquisition.

The data is included as Investments in Subsidiaries and Investments in Associates in the consolidated balance sheet, and the investor's income statement contains the share of the associate's profits.

From a technical point of view, the inclusion of information about associated companies in consolidated financial statements is significantly less difficult than the consolidation of subsidiaries. It is important that information about associated companies is included in the financial statements of the investor company, regardless of whether the investor company prepares a QFO or not. However, the method of evaluating such investments depends on the need for the investor company to prepare consolidated statements.

The equity method is not applied in the following cases:

• if the investment in a subsidiary is classified as held for sale (in which case it should be accounted for in accordance with IFRS 5 Non-current assets held for sale and discontinued operations;
• if the investor is a parent company within a group that is exempt from preparing consolidated financial statements, then the investment must be accounted for at cost or in accordance with IAS 39;

When applying the equity method, the investing company must comply with technical requirements, preceding the use of the specified method (Table 6).

Table 6

If the amount expended to acquire an interest in an associate exceeds the corresponding portion of the value of the company's net assets, the difference represents goodwill. The amount of goodwill is included in the cost of the investment in the associate and the goodwill itself is subject to an annual impairment test in accordance with the requirements of IAS 36 Impairment of Assets.

When preparing consolidated statements, the amount of investment in an associated company increases (decreases) by the corresponding share of the parent company in the capital (including profit) of the associated company, while profit (loss) generated from transactions within the group is excluded. In addition, dividends paid by the associate to the parent company are excluded. Thus, the amount of investment in an associated company (IAC) is calculated using the formula:

IAC = I(0) + DIC – D;

Where I(0) is the initial investment in the capital of the associated company;

DIC – share in changes in the capital of the associated company;

D – the total amount of dividends paid to the investing company for the period from the moment of investment to the reporting date.

Example. LLC "Investor" acquired a 30% stake in CJSC "Associated Company" in August 2004. The cost of acquiring the share was 15,500 thousand rubles. The amount of net assets of CJSC "Associated Company" at the time of acquisition was 40,000 thousand rubles. The net profit of CJSC "Associated Company" from the moment of acquisition until the end of 2004 amounted to 8,820 thousand rubles. and for 2005 – 9280 thousand rubles. Dividends based on the results of 2004, paid to the investor company in 2005, amounted to 1,850 thousand rubles. As a result of the revaluation carried out by the associated company in September 2005, the value of fixed assets increased by RUB 2,100 thousand. In 2005, purchase and sale transactions of finished products were carried out between OJSC "Investor" and CJSC "Associated Company", from which the net profit of CJSC "Associated Company" amounted to 1,250 thousand rubles. Accounting Policies companies do not differ with respect to similar transactions under comparable conditions.

First, let's calculate the amount of goodwill upon acquisition of a share in an associated company.

Purchase price – 15,500 thousand rubles.

The amount of net assets is 40,000 thousand rubles.

Share in acquired net assets

(40,000 thousand rubles x 30%) – 12,000 thousand rubles.

Goodwill (15,500 thousand rubles – 12,000 thousand rubles) – 3,500 thousand rubles.

To calculate the value of the IAC for the next reporting date (December 31, 2004), you should calculate the value of the net profit of the associated company after the acquisition: In this case, we will assume that no impairment of goodwill occurred.

Table 8

Based on the results of the calculations performed, the following information will be displayed in the CFO OJSC "Investor":

• in the consolidated balance sheet – the indicator “Investments in associated companies” (RUB 16,296 thousand);
• in the consolidated income statement – ​​the indicator “Share in net profit (net loss) of associated companies” (RUB 3,039 thousand);
• in the consolidated statement of changes in equity - the increase in capital due to the associate will be shown as part of the relevant items.

When the share of the investor company in the loss of the associated company exceeds the positive sum of other components of the indicator of investments in the associated company, the value of the IAC is reduced to zero, and the amount of investment ceases to be recognized in the financial statements, but is subject to disclosure in explanations for reporting .

Dividends received from the associated company are deducted from the investment amount.

Joint ventures: proportionate consolidation

A specific form of combining financial and other resources is the creation of joint companies or the conclusion of an agreement on joint activities.

The concept of joint venture is contained in IAS 31 Financial Reporting of Interests in Joint Ventures. In accordance with it, the term “joint company” is applied to any scheme of joint activity.

First of all, joint ventures are characterized by a joint venture agreement. It is concluded between two (or several) organizations. Companies whose constituent documents do not contain a contractual agreement between participants to establish joint control are not considered joint.

For accounting and reporting, IFRS 31 distinguishes three types of joint control:

1. jointly controlled transactions;
2. jointly controlled assets;
3. jointly controlled companies.

Jointly controlled operations

This form of joint company arises when the resources of its participants are used without establishing a separate financial structure. An example of such an association is the case when several participants combine their resources to develop, produce or sell a product. As a rule, this form is typical for research and development work, as well as during the construction of complex and resource-intensive facilities. Each participant carries out their part of the research and production process. For this, he receives a certain share of income when selling the results of joint operations.

Example. Companies "Alpha" and "Gamma" enter into an agreement to establish a joint construction company office building for further rental. The Alpha company is constructing the building structure. The Gamma company carries out all internal Finishing work. The joint venture agreement stipulates the ratio in which the companies share the income from leasing the building and the costs associated with its construction.

All transactions related to jointly controlled operations are accounted for by each participant in an account specially opened for these purposes. To determine the total profit (loss) for jointly controlled transactions at the end of the reporting period, a special memorial account is compiled for accounting for transactions in joint activities, which reflects all income and expenses of all participants in jointly controlled transactions. The profit (loss) determined in this way is distributed among the participants in a predetermined proportion.

Jointly controlled assets

In this case, the participants jointly control, manage and own the assets that they have specifically allocated or acquired for joint activities. Assets are used to achieve the goals specified in the joint venture agreement. An example of this type of company would be the joint operation of an oil pipeline by several oil companies.

Jointly controlled companies

A joint venture involves the establishment of a joint venture in which each participant has his own share of participation.

The difference between such a company and other enterprises is that, on the basis of a joint activity agreement, the participants establish control over the entire work of the enterprise. Often such companies do not set profit as a goal. The management of such an organization acts not on the basis of a charter or other similar document, but on the basis of a power of attorney issued by its participants.

IFRS 31 takes this situation as an example. An enterprise begins operations in another country or another administrative entity on the territory of its country. At the same time, it creates local authorities authorities or commercial structures operating on the territory of a given state or administrative entity, a joint venture.

Each JV participant invests its own resources in the jointly controlled company. These contributions are recognized in the participant's financial statements as an investment in the jointly controlled entity. A participant recognizes its interest in the joint venture using the proportionate consolidation method or the equity method except in the following cases:

1. if the investment in the joint venture is classified as held for sale (in which case it must be accounted for in accordance with IFRS 5 Non-current assets held for sale and discontinued operations;
2. If the investor is a parent company within a group that has elected not to prepare consolidated financial statements, the investment must be accounted for at cost or in accordance with IAS 39.
3. An investment in a jointly controlled entity is accounted for at cost or in accordance with IAS 39 if all of the following conditions are met:

a) the participant is a subsidiary wholly or partially owned by another company (subject to the consent of minority shareholders, if any);

B) the participant’s debt and equity instruments do not have quotation on the foreign market;

B) the participant has not provided its financial statements to a recognized stock exchange;

D) the participant's intermediate or ultimate parent company presents consolidated financial statements in accordance with IFRS.

Equity method- a method by which the participation interest in a joint venture is initially recorded at cost and then adjusted for changes in the jointly controlled company's net assets owned by the joint venture participant that have occurred since the acquisition

Proportional consolidation– a method of accounting and reporting, according to which the participant’s share in the assets, liabilities, income and expenses of the joint venture is combined line by line with similar items in its financial statements or shown on separate lines.

It should be noted that with proportional consolidation, there is no minority interest indicator in the balance sheet, since only one’s share of assets and liabilities is added.

TASKS

TASK 1

(1) On January 1, 2005, XXX Company purchased 50,000 shares of Oval Company stock for $130,000, which had earnings of $85,000 at the time of acquisition.

(2) XXX's inventory includes items purchased from Oval during the year for $8,000 at a 25% markup on cost.

(3) A check sent to XXX by December 31, 2005 for $1,000 was not received by Oval by January 1, 2005.

(4) Since the date of acquisition, goodwill has been impaired by $5,000.

Below are the balance sheets of the companies “XXX” and “Oval”:

Exercise: prepare the consolidated balance sheet of the XXX group as of December 31, 2005 .

TASK 2

(1) On January 3, the Universal company bought shares of Casual, whose profit at the time of purchase was $308 thousand, and on July 1, it invested in Smart, whose profit was $400 thousand.

(2) Smart's inventory includes items purchased from Universal during the year for $12,000 with a 20% markup on cost.

(3) In August, “Universal” purchased goods from the “Casual” company for 30 thousand dollars, the profitability of sales was 25%. By the end of the year, Universal sold 50% of these goods.

(4) In December 2005, Casual Company carried out a preferential issue of 1 ordinary share for each ordinary share. This operation not reflected in the balance sheet.

(5) Accounts receivable from “Universal” include debt from “Casual” in the amount of $100 thousand. Accounts payable in the reporting of “Casual” are different, because it has already made a payment in the amount of $50 thousand, which Universal has not yet received.

(6) Goodwill arising from Casual at the time of purchase is impaired by 50%.

(7) Smart's goodwill depreciates by 20% each year, the depreciation is calculated monthly.

Exercise: prepare the consolidated balance sheet of the Universal group as of December 31, 2005.

TASK 3

(1) On January 1, 2004, the Butterfly company acquired 40,000 shares of the Freelife company by exchanging shares according to the following scheme: for 2 of its shares - 5 shares of Freelife, plus an additional payment of $ 5.5 for each share " Freelife." The market value of 1 Butterfly share was $4.5.

(2) On April 1, 2005, Butterfly entered into an agreement with Rhine for joint control of Sky, acquiring a 50% stake. The parties to the transaction agreed that the value of the Sky company was $600,000. Thus, Butterfly issued and transferred 50 thousand of its ordinary shares to Rhine (the market value at that time was already $5) and paid an additional 50,000 in cash Doll.

(3) At the time of purchase, FreeLife's earnings were $210,000. During 2005, Sky earned $36,000 on a straight-line basis.

(4) The carrying amount of Sky's assets at the acquisition date was generally consistent with their fair value, but this was not the case for Freelife. The fair value of fixed assets listed on the balance sheet in the amount of $115,000 and a remaining useful life of 5 years was higher by 20%, inventory was $4,000 higher than their book value of $26,000.

(5) During the period, Freelife sold Butterfly goods worth $30,000. The profitability of sales was 20%.

(6) Butterfly sold inventory to Sky for 2005 for $24,000, including a 25% markup.

(7) The resulting business reputation decreased for both companies: by 10% for Freelife and 5% for Sky.

(8) On December 30, 2005, FreeLife declared a dividend of $100,000. Sky did not pay any dividends.

(9) Sky, a jointly controlled entity, shall be accounted for using the proportionate consolidation method in accordance with IAS 31 Interests in Joint Ventures.

Exercise: prepare the consolidated balance sheet of the Butterfly Group as of December 31, 2005.

PREPARATION OF CONSOLIDATED PROFIT AND LOSS REPORTS

Subsidiary and associated companies

TASK 4

Below are the draft statements of profit and loss of House, Room and Garden Companies for the year ended 30 June 2005.

House Room Garden

$000 $000 $000

Income 13,525 5,384 9,277

Operating expenses (12,305) (4,884) (8,190)

Operating profit 1,220 500 1,087

Dividends receivable 198 - -

_______ ______ ______

1,418 500 1,087

Income tax (593) (248) (463)

_______ ______ ______

Profit after taxes 825 252 625

Dividends declared (490) (96) (200)

_______ ______ ______

Retained earnings 335 162 425

House owns 80% of Room (acquired January 1, 2005) and 40% of Garden (acquired July 1, 2004). The head of the Garden is a member of the board of directors delegated from the House.

Room's inventory at June 30, 2005 included items purchased in May 2005 from House for $45,000. House sells with a 20% markup on cost. There were no other sales between House and Room.

House's revenue from sales of Garden amounted to $200,000. At the end of the year, the Garden warehouse did not have any of the goods purchased from House.

Assignment: p prepare the consolidated income statement of the House group for the year ended 30 June 2005. Goodwill not taken into account

Subsidiary and joint venture

TASK 5

Below are the draft income statements of companies X, Y, Z for the year ended December 31, 2005.

$000 $000 $000

Revenue 10,590 7,830 4,060

Cost (9,140) (6,503) (3,428)

______ ______ ______

Gross profit 1,450 1,327 632

Operating expenses (485) (604) (201)

Dividends received 75 13 -

______ ______ ______

Profit before taxes 1,040 736 431

Income tax (280) (164) (96)

______ ______ ______

Profit for the year 760,572,335

Company X acquired 80% of the shares of Company Y on January 1, 2005, and 50% of the shares of Company Z on July 1.

X sold goods to Y for $180,000 at a 25% markup on cost. At the end of the year, half of these reserves were included in inventories.

Z sold $48,000 worth of goods to X on December 1, 2005, including a 20% markup on cost. All of these items were included in year-end inventories.

Profit is generated evenly throughout the year.

Dividends are received from companies outside the group.

The accounting policy defines the method of proportional consolidation.

Assignment: p prepare the consolidated income statement of Group X for the year ended 31 December 2005. Goodwill not taken into account(calculations rounded to the nearest $1,000).

COMPLEX CONSOLIDATIONS

TASK 6

Exercise: draw up a consolidated balance sheet.

TASK 7

• Economics, Business

Prodanova I.A.,
doctor economic sciences,
Professor of the Department of Accounting
REU im. G.V. Plekhanov,
Seropyan V.D.,
Master's student of the faculty
business REU them. G.V. Plekhanov
Financial management,
№4 2015

This paper describes the methodology for preparing consolidated statements and provides an example of its implementation for the company JSC Jupiter.

According to Federal Law No. 208-FZ dated July 27, 2010 “On Consolidated Financial Statements,” certain groups of companies, starting from 2015, must annually submit consolidated financial statements prepared in accordance with the provisions of IFRS. Companies that have not previously submitted consolidated statements need to establish a reporting process, starting with a description of the methodology and ending with it. practical application. Assessing the theoretical basis available on this moment, we can say that the problem of preparing consolidated statements is mainly considered superficially. The main emphasis is on procedural issues in the preparation of consolidated financial statements in the context of following regulatory regulation, conclusions and recommendations are of a general nature.

Let's consider the methodology for preparing consolidated reporting and an example of its implementation for the company OJSC Jupiter.

Generation of a consolidated report on financial situation(hereinafter referred to as the GPP) of the group of companies is carried out in stages:

1. line-by-line summation of GPP articles;
2. determination of net assets of subsidiaries/associated companies as of the reporting date;
3. determining the amount of goodwill at the reporting date;
4. determination of non-controlling interest at the reporting date;
5. reconciliation and elimination of intragroup settlements and unrealized profits in balances;
6. consolidation adjustments;
7. determination of retained earnings.

1. Line-by-line summation of the articles of general physical preparation of consolidated companies

When preparing consolidated financial statements using the full consolidation method, the financial statements of the parent company and its subsidiaries are combined by adding line-by-line items of similar assets and liabilities (excluding equity lines).

2. Determination of the net assets of the consolidated companies at the reporting date

At the reporting date, additional expenses or income must be recognized in the financial statements of subsidiaries arising in connection with the depreciation or write-off of revaluation amounts of assets (liabilities) of companies measured at fair value at the acquisition date, and the corresponding expenses or income for deferred income taxes.

3. Determination of the amount of goodwill at the reporting date

Goodwill on an acquisition of a subsidiary is calculated as the sum of the parent's acquisition costs and the value of any non-controlling interest in the acquired subsidiary less the identifiable assets and liabilities acquired (net assets) measured at acquisition-date fair value.

Goodwill measured at the acquisition date is subject to impairment testing at the reporting date.

4. Determination of the non-controlling interest of the group at the reporting date

Non-controlling interest is presented in the consolidated statement of financial position of the group as part of Equity, separately from the equity of the shareholders of the group parent.

Non-controlling interest is recognized in the consolidated financial statement until the non-controlling interest in the subsidiary's accumulated losses equals or exceeds the non-controlling interest at the date control of the subsidiary is acquired.

After that point, all further losses of the subsidiary are attributable solely to the group, unless the non-controlling interest has the obligation and ability to invest additional funds to cover the losses of the subsidiary. If, in subsequent periods, the subsidiary makes a profit, the recognition of the non-controlling interest is resumed only after the amount of the loss previously recognized in full by the group has been recovered.

Non-controlling interest in a company's total income (expense) is calculated using the following formula:

NDU sd = sd * (100% - %K),

where NDU sd is the share of non-controlling shareholders in the total income (expense) of a subsidiary of the group for the reporting period;
CD - total income (expense) of a subsidiary of the group for the period;
%K is the group's share of ownership of the subsidiary.

The share of non-controlling shareholders is not included in the calculation of comprehensive group income but is presented as reference information in the “Comprehensive income (expense) attributable to noncontrolling interest” line after the “Total comprehensive income for the period, net of tax” line in the consolidated statement of income or other comprehensive income.

5. Reconciliation and elimination of intragroup settlements and unrealized profits in balances

All balances between companies in the group must be completely eliminated. Elimination is based on the amounts of reconciled intercompany balances at the end of the period.

In accordance with this requirement, all balances of receivables and payables are excluded, both for transactions involving the sale of goods (works, services) and for other transactions. The company is also required to create entries to exclude intra-group sales income recorded by the selling company against expenses recognized by the purchasing company for the corresponding transaction.

When excluding turnover on intra-group transactions, VAT is not adjusted, since taxes are calculated in accordance with Russian tax legislation and represent settlements between the group and third parties.

Unrealized gains arising from the sale of goods or the transfer of fixed assets, intangible assets or other assets within the group at a markup should be completely excluded from the carrying amount of assets recorded in the general financial statement at the reporting date.

When eliminating unrealized gains, the direction of the sale must be taken into account:

1) if the seller of intra-group transactions is the parent company, then the unrealized profit is subject to exclusion through the retained earnings of the group;

2) if the seller of intragroup transactions is a subsidiary, then unrealized profits are excluded when calculating net assets.

6. Consolidation adjustments

After eliminating intra-group settlements, unrealized gains in balances and calculating the minority interest in the group's equity, the following consolidation adjustments need to be made:

1) exclusion of capital of subsidiaries against group investments and reflection of goodwill. During consolidation, the carrying amount of the parent company's financial investments in the subsidiary and the portion of the subsidiary's capital owned by the parent company are excluded from the consolidated general financial statement;

2) reflection of impairment of goodwill. Goodwill recognized at the date of acquisition of a subsidiary is not amortized.

The parent company must test goodwill for impairment on an annual basis. An impairment loss is recognized only if the carrying amount of the unit exceeds its recoverable amount. Recoverable amount is determined as the greater of:

1. fair value less costs to sell and
2. use values.

An impairment is recognized to the extent that the carrying amount exceeds its recoverable amount;

3) reflection of non-controlling interest;

4) adjustments to previous reporting periods.

To account for the amounts of assets, liabilities and equity in the consolidated financial statements at the reporting date, the amount of adjustments from prior reporting periods must be taken into account.

7. Calculation of retained earnings

As a result of reflecting all consolidation adjustments affecting the retained earnings (accumulated loss) account of the group, the amount of retained earnings attributable to the shareholders of the parent company at the reporting date is formed in this account.

The group's retained earnings as reflected in the consolidated financial statements are the sum of the following:

1. retained earnings of the parent company;
2. share of the increase in net assets of subsidiaries owned by the group;
3. consolidation adjustments affecting the group's consolidated profit;
4. adjustments to the reporting of the parent company in case of detection of errors, unaccounted items, etc.

Consolidation of reporting using the example of the Jupiter group of companies

Parent company: JSC Jupiter

Subsidiary company: OJSC Neptune (70% of shares owned by OJSC Jupiter)

12/31/2013 JSC Jupiter acquired 70% of the shares of the Neptune company for 210 LLC. As a result, control of Neptune was gained and its accounts were to be consolidated.

As of December 31, 2013, the fair value of the building was 80,000 (book value - 50,000). The fair value of the net assets of the Neptune company at the date of acquisition was 170,000, the book value of the net assets was 140 LLC. The general financial statements of Neptune company and the assessment of assets at fair value as of December 31, 2013 are presented below:

The entry for the acquisition of Neptune is as follows:

Dt "Investments"

CT "Cash" 210,000

Consolidation:

Determination of net assets

Determination of the amount of goodwill at the reporting date:

Investment cost calculation

Investment in Neptune company = 210,000

Goodwill calculation:

Determination of non-controlling interest

Reconciliation and elimination of intragroup settlements and unrealized profits in balances

As of December 31, 2013, the accounts receivable of Jupiter OJSC included the debt of Neptune in the amount of 15,000.

The following adjustments are made:

Consolidated accounts receivable -15,000

Consolidated accounts payable -15 000

Calculation of unrealized profit:

Neptune purchased goods from Jupiter for resale in the amount of 60,000, excluding VAT. Jupiter reflected the income of the reporting period as 70,800, VAT payable as 10,800, and the cost of goods sold as 45,000. Thus, the net revenue of Jupiter was 60,000, and profit from the sale of goods was 15,000. Adjustments need to be made. by exception within group settlements.

During the analysis of the activities of the Neptune company, it was revealed that of the goods purchased by it, goods worth 20,000 were sold to third-party companies (not included in the group), and goods worth 40,000 remained in the warehouse at the end of the reporting period.

Unrealized profit in balances arises only on goods costing 40,000 that were not sold outside the group and remain in Neptune's warehouse at the end of the reporting period. To calculate unrealized profit in balances, it is necessary to multiply the total amount of profit of the Jupiter company by the ratio of goods not sold externally by the Neptune company to total cost goods purchased by Neptune from Jupiter:

Unrealized profit in balances = 15,000 * 40,000 / 60,000 = 10,000.

Therefore, the unrealized intra-group gain in inventory balances is 10,000 and should be eliminated in the consolidated financial statements.

When consolidating, it is necessary to reflect the following adjustments to exclude turnover on intragroup transactions:

for the amount of the cost of goods sold by the Neptune company:

DT “Proceeds from disposal of inventories” (GPU) 20,000

CT “Expenses from disposal of inventories” (OPU) (20,000)

for the amount of the book value of goods sold by the Jupiter company to the Neptune company and remaining in the Neptune company warehouse at the end of the reporting period, for the Jupiter company on the date of sale:

DT “Proceeds from disposal of inventories” (GPU) 30,000

CT “Expenses from disposal of inventories” (OPU) (30,000)

for the amount of unrealized profit in the balances:

DT “Proceeds from disposal of inventories” (GPU) 10,000

CT “Goods for resale” (GPU) (10 00)

Consolidation adjustments

After eliminating intra-group settlements, unrealized gains in balances and calculating the minority interest in the capital of the group, the following consolidation adjustments are made: eliminating the capital of subsidiaries, recording goodwill, calculating non-controlling interest, and adjusting previous reporting periods.

As a result of summing up all general financial statement items and reflecting all consolidation adjustments, the following consolidated statement of financial position for the Jupiter group of companies is generated:

When preparing consolidated financial statements, you need to pay attention to the following points:

• goodwill must be assessed for impairment annually, as are investments in associates;
• When consolidating complex groups, the existence of control over the company must be carefully assessed. Mechanical accounting of shares may not provide a true picture of control;
• current assets, with the exception of inventories, often already reflect their real value. But to evaluate fixed assets and inventories, it will most likely be necessary to involve independent appraisers.

Literature

1. the federal law dated July 27, 2010 No. 208-FZ (as amended on July 23, 2013) “On consolidated financial statements.”

2. International Financial Reporting Standard (IFRS) 10 “Consolidated Financial Statements”.

3. International Financial Reporting Standard (IAS) 28 “Investments in Associates and Joint Ventures”.

4. International Financial Reporting Standard (IAS) 36 “Impairment of Assets”.

5. Zotov S. Reflection in accounting and reporting of mergers of companies (consolidation) // Current Accounting. - 2013. - Dec.

6. ConsultantPlus [Electronic resource]. URL: http://www.consultant.ru

7. Ministry of Finance of the Russian Federation [Electronic resource]. URL: http://www.minfin.ru

8. Bukh. 1C. Unrealized profit from intragroup transactions during consolidation [Electronic resource]. URL: http://buh.ru/

The need to prepare consolidated financial statements, as follows from international standards, is dictated by the expediency of providing external reporting users with comprehensive information about financial condition and performance results of consolidated enterprises.

Consolidation of financial statements is the process of combining and synchronizing the indicators of the financial statements of a group of enterprises in order to present this group in a single reporting package of the parent (holding) enterprise. 1

The group is created at the moment enterprise consolidation, in other words, when one enterprise acquires a share in the capital of another enterprise of a size sufficient to act as a controlling participant in relation to it - the parent enterprise, or when several enterprises merge into a holding.

The acquisition of a share in the capital can be carried out either by creating a subsidiary or by purchasing a controlling stake from a third party. The smallest group consists of two enterprises. There is no upper limit limiting the number of enterprises forming a group.

If the acquiring enterprise acquires another enterprise entirely as Property Complex, but in this case the second is not absorbed by the first (i.e., the acquired enterprise does not lose the status of a separate legal entity), then such a merger is also called consolidation, and therefore also entails the obligation to prepare consolidated statements. Often, enterprises are consolidated with the goal that the owners of the merging enterprises become the owners of these enterprises as a single economic complex - a holding company, that is, also without each of the merging enterprises losing the status of legal entities. In this case, each participant, in exchange for his old shares, receives new shares in the holding company in proportion to his share.

1. horizontal– merger of enterprises of the same industry;
2. vertical– association of enterprises of the same industry, but operating at different stages of the production cycle;
3. conglomeration– association of enterprises from various industries. 2

In each of the three cases, consolidation is possible both on the basis of the “daughter-mother” principle and on the terms of creating a holding company.

In the domestic specialized literature there is a rather clumsy attempt by authors to distinguish “types of groups” in a similar way. For example:

1. “horizontal group” is a group in which the parent company’s participation in each of its subsidiaries is conditioned by ownership of more than 50% of their shares (votes);
2. “vertical group” is a group in which the parent enterprise controls the capital of the “grandchild” enterprise through its subsidiary - the direct founder of such an enterprise;
3. A “mixed group” is a group characterized by the presence of sequential-parallel connections between controlling and dependent enterprises.

It seems that such “typing of groups” is absolutely unnecessary theorizing. Firstly, vertical or horizontal groups in their pure form are very rare and therefore almost all groups fall under the category of “mixed”. Secondly, within any group consisting of many enterprises, changes can constantly occur in relation to control over certain subsidiaries (and “grandchildren”), which entails a transition from one “type of group” to another. At the same time, neither legal nor economic consequences for third-party investors or creditors (in a word, external users of reporting) such ongoing transformations do not cause. And, most importantly, for none of these persons, it does not matter what this group of enterprises is called as of a particular reporting date: horizontal, vertical or mixed.

Another thing is the types of associations based on the characteristics identified by D. Middleton. They clearly show the purpose of the merger (consolidation): economies of scale (horizontal consolidation), product quality control (vertical consolidation), joint control over sales markets (conglomeration), etc., the list of goals is not exhaustive, but however, it is always possible to find out whether consolidation borders on monopolization. Because in all three cases government bodies those who give permission for the consolidation of enterprises can check how much this act complies with antimonopoly legislation.

What is the difference between goodwill during consolidation and “just” goodwill?

Only by the fact that goodwill is reflected in the accounting registers and in the reporting, and goodwill during consolidation is reflected only in the consolidated report. In this connection, the depreciation of goodwill is also accrued and reflected in the accounting registers, and the depreciation of goodwill during consolidation is only in the consolidated report, moreover, once a year when this report is compiled.

In both the first and second cases, the appearance of goodwill is determined by the identification of the difference between the acquisition price of the enterprise (or a share in the capital giving the buyer the right to control) and the market (fair) value of its assets. This difference arises from a well-known rule: the whole is not always equal to the sum of its parts. Likewise, the value of an enterprise, as a rule, differs significantly from the amount that could be gained if all its assets were sold separately.

Example 1. When 100% of the capital of another enterprise is acquired.

The cost of acquiring the enterprise is 180.0 thousand units. 3

The market (fair) value of net assets as of the date of acquisition (or consolidation) is equal to 135.0 thousand units.

The book value of net assets at the date of acquisition (or consolidation) is 75 thousand units.

Therefore, the difference is:

135.0 – 75.0 = 60.0 thousand units. will be included item by item in the cost of the acquired assets.

And goodwill:

180.0 – 135.0 = 45.0 thousand units. subject to separate reflection.

Moreover, if we are talking about the takeover of an enterprise by an enterprise, goodwill is reflected not only on the balance sheet, but also in the accounting registers and remains there until it is completely depreciated (which will happen after many years). And if we are talking about creating a group, goodwill is reflected only in the consolidated balance sheet, and is transferred from period to period, from the previous report to the subsequent one, also until it is fully depreciated.

The latter circumstance is explained by the fact that during consolidation, unlike a takeover, there is no transfer of the assets of one enterprise to another, since these two enterprises, which have become, respectively, parent and subsidiary, remain economic units operating separately.

Example 2. When only a certain share in the capital is acquired, giving the right of control.

The cost of acquiring a 60% share in the capital of the enterprise is 180.0 thousand units. This means that the valuation of the enterprise as a whole at the date of sale is 300.0 thousand units. At the same time, the market (fair) value of net assets as of the acquisition date is equal to 135.0 thousand units.

The book value of the share of net assets, constituting 60% of the value of their entire aggregate (75.0 thousand units), at the date of acquisition is 45 thousand units: 75.0 x 0.6 = 45.0.

Therefore, it is necessary to take into account only 60% of the excess of the market value of assets over their balance sheet value:

• (135 – 75) x 0.6 = 36.0 thousand units.

Thus, the ownership share of the parent enterprise will be:

• 45.0 + 36.0 = 81.0 thousand units.

• (75 x 0.6) + (60 x 0.6) = 81 thousand units.

The appropriate minority interest in the carrying amount of net assets must then be added to this estimate when preparing consolidated financial statements. This share is 40% of the amount of 75.0 thousand units. and equal to 30.0 thousand units.

• 75.0 – 45.0 = 30.0 thousand units.

Therefore, the estimate of the share of net assets owned by the parent in the consolidated statements will be:

• 81.0 + 30.0 = 111.0 thousand units.

Goodwill in this case will be calculated as the difference between the amount of investment in the subsidiary and the parent company’s share in the balance sheet valuation of its share of assets in the subsidiary, as well as the excess of their market value over the balance sheet value distributed to the relevant assets:

• 180.0 – 45.0 – 36.0 = 99.0 thousand units.

This amount (99.0 thousand units) is shown in a separate (entered) line of the first consolidated balance sheet as “Goodwill on consolidation”. This amount is gradually amortized in all subsequent consolidated balance sheets.

Under opposite initial conditions (when the amount of investment in an enterprise is lower than the market value of its net assets), negative goodwill is determined in a similar way.

And one last thing about goodwill. It is probably hardly worth reminding that when creating a subsidiary from scratch, no goodwill arises and cannot arise.

Report consolidation procedure

American scientists Enders, Watfield and Mohr identified consolidation in a separate accounting principle. It can be argued whether consolidation should be elevated to the rank of a principle at all, because the procedure for consolidating financial statements, as other American scientists Eldon S. Hendriksen and Michael F. van Breda note, has not yet developed into a consistent logical model, therefore an ideal, unified guide there is no consolidation clause. 4 And this is true, since a lot in these procedures depends on many related and unrelated factors. In particular, on the organization of document flow within the group, which, in turn, depends on the specifics of the enterprises’ activities and, therefore, is established individually.

However, the entire procedure for consolidating financial statements can be divided into two large stages:

1. consolidation (consolidation) of reporting data of all enterprises included in the group;
2. exclusion from summary indicators of quantities related to internal operations, which, in particular, include (these procedures are sometimes called elimination):
1. investments between enterprises belonging to the group;
2. income, expenses and profits/losses from mutual transactions between group enterprises;
3. settlement transactions between group enterprises and the balance of such settlements;
4. mutual loans and borrowings.

Thus, the following is carried out: capital consolidation, consolidation of intragroup settlement balances and consolidation of financial results from intragroup transactions.

If we are talking about consolidated statements of a group in which the parent company does not own all the funds of the controlled enterprise(s), i.e. only a certain share in the capital, then in this case, between the first and second of these stages, it becomes necessary to determine the n. minority share.

The minority interest in each subsidiary is determined as the product of the percentage of voting rights not held by the parent divided by the equity (including net income/loss) of the subsidiary. In the consolidated balance sheet, the minority interest is reflected in a separate (write-in) “Minority Interest”, and in the income statement, the minority interest in profit/loss is reflected in the line under the same title.

The need for the procedures listed in paragraph 2 is explained by the need to eliminate the undesirable effect of “re-accounting”: everything earned through joint efforts is not shown twice in one report. By the presence of such procedures, consolidated reporting differs from consolidated reporting, where only mechanical aggregation of items is assumed.

Consolidated reporting is a special case of consolidated reporting, provided that the parent company owns 100% of the capital of all enterprises of the group, and no intra-group turnover was carried out during the period. Although in this case there is one “but”: such a report should not show either the authorized capital of subsidiaries, or the investments of the parent company in subsidiaries. All other indicators are summarized.

Consolidated balance

When preparing a consolidated balance sheet, a consolidated balance sheet is initially compiled by line-by-line summation of the corresponding items in the reports of subsidiaries and adding the results of such addition to similar items in the balance sheet of the parent enterprise: count 2 + count 3 + count 4 = count 5 (see table).

Next, it is determined which adjusting entries, in order to eliminate the possibility of repeated accounting, must be entered into the consolidation journal. Such work is performed only during the preparation of reporting and is not reflected in accounting registers neither parent nor subsidiaries. In such a magazine (since we are not talking about accounting entries) instead of the entries “Debit” and “Credit” it is more correct to designate “+” and “–”. You can do without a consolidation journal if the auxiliary tables in which the calculations are made are saved as registers from period to period.

So, all assets of subsidiaries are added to the corresponding assets of the parent enterprise, and all accounts payable of subsidiaries are added to the corresponding types of liabilities of the parent enterprise, with the exception of:

1. assets (including accounts receivable) and liabilities arising from transactions between consolidated enterprises, the amount of which should be adjusted to the general balance sheet;
2. investments of the parent enterprise in subsidiaries - the share of capital of subsidiaries that belongs to the parent; in this case, the excess of the costs of investments in subsidiaries over their balance sheet valuation is reflected in the consolidated balance sheet as goodwill (in the entry line “Goodwill on consolidation”).

Minority interests are reflected in the consolidated balance sheet because this statement should reflect information about the capital contributed by all shareholders, and not just that owned by the group.

Consolidated income statement

When preparing a consolidated statement of financial results, as well as when preparing a consolidated balance sheet, a consolidated report is compiled by line-by-line summation of the relevant items in the reports of subsidiaries and adding the results of such addition to similar items in the report of the parent enterprise: count 2 + count 3 + count 4 = count .5 (see table).
Next, it is determined which adjusting entries, in order to eliminate the possibility of repeated accounting, must be entered into the consolidation journal.

For example, the consolidated item “Income from sales” should include only income from those transactions that were made with entities not included in the group, and the cost of goods sold (products, works, services) should include only the cost of goods inventories, works and services purchased externally. Thus, amounts received/transferred through internal settlements are eliminated.

Intragroup transactions may include:

1. revenue from the sale of products (goods, works, services) to subsidiaries and vice versa: revenue from the sale of products (goods, works, services) of subsidiaries to the parent enterprise, as well as revenue received as a result of the sale of assets of one subsidiary to another subsidiary within the group;
2. cost of products (goods, works, services) sold to subsidiaries and vice versa: cost of products (goods, works, services) sold by subsidiaries to the parent, as well as sold by subsidiaries to each other;
3. interest paid (accrued) or received (accrued receivable) on intragroup loans and borrowings;
4. other income and proceeds received as a result of intragroup transactions;
5. other expenses and payments made as a result of intragroup transactions;
6. dividends received (accrued receivable) from subsidiaries;
7. dividends paid (accrued for payment) to the parent company.

Minority interest in net income is deducted from total income. The consolidated income tax accrued for payment is distributed by the parent enterprise within the group in proportion to the profits of the participants or is not distributed if the parent enterprise pays this tax on its own behalf.

The consolidated cash flow statement, or more precisely, its second and third parts, is prepared in a similar way. If the first part of the cash flow statement is compiled indirectly and on the basis of indicators of the first two forms (balance sheet and income statement), then consolidation in this part does not require any adjusting entries; it is enough to summarize all indicators line by line. However, the second and third parts of the cash flow statement, since they are compiled, in any case, in a direct way, require many adjustments in the event of internal turnover in investment (financial) activities. But all adjustments ultimately come down to one model: the separation of internal cash flows from the total inflows and outflows and their removal from consolidated indicators.

The table in the financial results statement also provides an approximate scheme for bringing it to a consolidated form, which does not take into account all possible circumstances developing in the relations between the group's enterprises.

Thus, if during the period one of the group’s enterprises sold goods to another enterprise included in the group, and the latter, in turn, did not manage to sell them to third parties by the end of the period or sold them partially, then this circumstance should be taken into account accordingly in the consolidated report . Namely, it is necessary to distinguish the amounts that make up the internal turnover in these operations, and the amounts attributable to the external turnover, and in all its manifestations: income, expenses and profit. An ideal report under such circumstances can only be drawn up theoretically; in practice, one must simply strive for maximum accuracy, which, in turn, is possible only with ideal organization of accounting both at the parent and subsidiaries and with ideally planned subordination of enterprises (especially when “daughters” have their own “daughters”, i.e. “granddaughters” of the parent company, and so on along the chain). What if the group includes several dozen enterprises “scattered” throughout the country? What if at least one of the group’s enterprises is located outside the country?

Therefore, it makes no sense to expect reports that, in a consolidated form, could accurately reflect the state of affairs for the group as a whole. It should be remembered that the purpose of consolidating financial statements is simply to combine and synchronize the indicators of the financial statements of a group of enterprises in order to present its performance indicators in a single package.

Who is interested in reporting consolidation?

So, a consolidated report is just an attempt to provide generalized information about the group’s enterprises with a minimum number of indicators.

Investors and creditors study consolidated statements instead of studying a pile of disparate reports. But this raises another question: are there really that many investors who invest money in all the group’s enterprises at once? Each of them, as a rule, is only interested in the reporting indicators of the enterprise in which his funds are invested. Perhaps, after all, accountants of parent enterprises should not expend so much effort for an insignificant effect? In general, the problem of consolidating the reports of the “daughter-mother” group seems to the author of this work to be artificially created. Moreover, not by those people who should solve this problem for unknown reasons.

It would seem that holding is another matter. Investors (not the founders of the holding) invest their funds in the holding company as a whole, and not in any specific enterprise included in this group. But wouldn’t it be simpler to create a system for notifying investors and creditors about where, to which enterprises of the group (and, if necessary, to what programs) the funds of a particular investor were directed? It seems impossible, but with all the complexity of organizing such work, it is no more impossible than drawing up a consolidated report that really reflects the state of affairs in a group of several dozen, a hundred or more enterprises.

Consolidated reports, in the author’s opinion, have no more practical meaning than if everything were 100% state enterprises one country would suddenly decide to draw up a “consolidated group report”, which would not take into account “internal” calculations and, accordingly, debts to each other, and financial results Only the results of external (export-import) transactions would be recognized, because there is only one owner - the state.

In connection with the above, the author takes the liberty of declaring that all attempts by specialists to develop any specific algorithms for compiling consolidated reporting, other than general recommendations, are nothing more than exercises in logic, useful only to the developers themselves.

1 Consolidation – from lat. consolidatio - strengthen, join.

2 See D. Middleton, “Accounting and Financial Decision Making.” M.: “Audit”, IO “UNITY”, 1997, p. 387.

3 [D.]units. – monetary units, – let’s take this designation as an example (so as not to confuse it with cu, which traditionally means US dollars)..

4 See E. S. Hendriksen, M. F. van Breda. Accounting theory. M.: “Finance and Statistics”, 2000, pp. 493 – 500.