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    1.+FRA - Study+Guide - v2.0 30

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    Jerlin Preethi

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    1.+FRA - Study+Guide - v2.0 30

    Uploaded by

    Jerlin Preethi
    3 views2 pages

    Original Title

    1.+FRA_Study+Guide_v2.0 30

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    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    3 views2 pages

    1.+FRA - Study+Guide - v2.0 30

    Uploaded by

    Jerlin Preethi

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    FINANCIAL REPORTING ANALYSIS

    General rule: Treat as if received by receiving party

    Cash in transit:
    Dr. Cash / Bank account
    Cr. Receivables account

    Goods in transit:
    Dr. Inventory account
    Cr. Payables account

    Step 2: Eliminate receivables and payables in consolidated statement of financial


    position (reconciled amount)

    Dr. Payables account


    Cr. Receivables account

    III. Intra-Group Dividends

    If the dividends payable by the parent company have not been accounted for the following
    adjustments will be necessary prior to consolidation

    Parent accounts
    Dr. Retained earnings
    Cr. Dividends payable

    If the dividends payable by a subsidiary company and receivable by a parent company


    have not been accounted for then the following adjustments will be necessary:

    Subsidiary accounts
    Dr. Retained earnings
    Cr. Dividends payable

    With the full amount of the dividend payable to shareholders

    Parent accounts
    Dr. Dividend receivable
    Cr. Dividends Income

    With the parent company’s share of the dividend payable by the subsidiary company
    Eliminate Intra-group dividends
    Dr. Dividends Income
    Dr. Non-controlling interest
    Cr. Retained earnings

    KHE-LCD-SGD-00446 56
    FINANCIAL REPORTING ANALYSIS

    Topic 8 Preparation of Consolidated Financial


    Statements

    Learning Objectives

    Prepare consolidated accounts for a group of related companies in compliance with


    national and international standards of reporting.

    After studying this topic will be able to:

    • Prepare Consolidated Statement of Profit or loss and Other


    Comprehensive Income
    • Prepare Consolidated Statement of Financial Position

    CONSOLIDATED STATEMENT OF FINANCIAL POSITION

    Workings

    W1 Group structure

    Parent
    H% = Shares acquired x 100%
    Total shares
    NCI (remainder %)
    %
    Subsidiary

    W2 Fair Value of Identifiable Net Assets of subsidiary


    As at year end As at acquisition
    date
    $ $ $ $
    Share capital x x
    Revaluation reserves x x
    Retained earnings x x
    Less:
    - Unrealised profit (x)
    - Depreciation (x) x
    A B

    Post-acquisition reserves =A–B=C

    KHE-LCD-SGD-00446 57

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