Consolidating accounts examples
These processes are described in the following sections.
On each business unit card, in the Currency Exchange Rate Table field, you specify whether consolidation will use exchange rates from the business unit or the consolidated company.
Example Suppose company B is having Net worth of Rs 10 lac, company A purchases 75% of share of company B, then remaining 25% i.e. Presentation as per Schedule III The CFS prepared in the same format as that of Separate Financial Statements, i.e, Schedule III of Companies Act 2013 Exclusion of Subsidiaries from Consolidation The Holding Company shall consolidate the financial statements of all the subsidiaries, domestic or foreign other than: Temporary Investment - When the shares are held in subsidiary company for disposal in near future.
Severe Restriction -Where there are long term restrictions on fund transfer from subsidiary to parent Company Different financial year of Subsidiary It will prepare an additional set of financial statement in accordance with financial year of holding Consolidation Procedure: Goodwill Computation At the date of acquisition Any excess of the cost to the parent of its investment in a subsidiary over the parent�s portion of equity of the subsidiary, at the date on which investment in the subsidiary is made, should be described as goodwill to be recognised as an asset in the consolidated financial statements Cost to parent Parent�s portion of Equity = Goodwill When the cost to the parent of its investment in a subsidiary is less than the parent�s portion of equity of the subsidiary, at the date on which investment in the subsidiary is made, the difference should be treated as a capital reserve in the consolidated financial statements Cost to parent Adjustments of carrying amount� Adjustments to the carrying amount of investment in an associate arising from changes in the associate�s equity that have not been included in the statement of profit or loss should be directly adjusted in the carrying amount of investment without routing it through the consolidated statement of profit and loss.
- Before Companies Act 2013, only listed company was required to do Consolidation.
AS 21 says that if a company is required to do consolidation then consolidation is required to be done as per criteria set up in AS 21.