Steps in preparing the consolidated balance sheet, Financial Accounting

Assignment Help:

Steps in preparing the consolidated balance sheet

Step 1:

Prepare the 3 important accounts i.e.

  • cost of control to determine goodwill
  • Group retained profits
  • Minority interest

 

Step 2:

Add the assets and liabilities of the subsidiary company to those of the holding company noting the following:

a) The investment in subsidiary company appearing in the holding company balance sheet will be excluded from the consolidated balance sheet and instead we will have goodwill on consolidation.

b) The ordinary share capital and preference share capital in consolidated balance sheet will only be that of the holding company. This is because the share capital of the holding company and the subsidiary is split between the cost of control (holding companies share) and the Minority interest.

c) The group retained profits will be the balance appearing in the group retained profits account and group capital reserves should also be completed the same way company group retained profits. (This means that group capital reserves will be made up of the holding company’s capital reserves plus holding companies share of post acquisition capital reserves in subsidiary).

d) The minority interest will be shown as part of shareholders funds in consolidated balance sheet but this is after getting the sub-total of the ordinary share capital, preference-share capital, group capital reserves and group retained profits.


Related Discussions:- Steps in preparing the consolidated balance sheet

Explain what happens if a swap is used ineffectively, The key criterion for...

The key criterion for qualifying as a hedge is that the hedging relationship must be highly effective in achieving offsetting changes in fair values or cash flows based on the hedg

Prepare the journal entry at december 31, On December 31, 2004, Internation...

On December 31, 2004, International Refining Company purchased machinery having a cash selling price of $85,933.75. The company paid $10,000 down and agreed to finance the remainde

Which product should harper tell its sales personnel, Harper Co. provided t...

Harper Co. provided the following information concerning two products: contribution margin per unit- product 12 $46 Contribution margin per unit-product 43 $30. Machine hours requi

Rules of intestacy-one surviving spouse, The intestate leaves one surviving...

The intestate leaves one surviving spouse, but no child or children The surviving spouse is entitled to: 1. The personal and household effects of the deceased absolutely: "per

Illustration for preparing final accounts, Illustration for preparing final...

Illustration for preparing final accounts K Ltd established a branch in Arusha Tanzania on 1.1.X2, when Kshs 1 = TShs 15. PPE costing Kshs 800,000 were purchased on that day. I

Prepare a cash budget, Question: The accountant of a company is prepari...

Question: The accountant of a company is preparing the cash budget for the first six months of 2011 and obtains the following information: Sales on credit, variable costs an

Define case study of a company that exports goods, Define Case Study of A C...

Define Case Study of A Company that exports goods? A company exports goods to country K. Your work as an international cash manager needs you to estimate the value of country K

Calculate the cash flow-agency costs, Tom Scott is the owner, president, an...

Tom Scott is the owner, president, and primary salesperson for Scott Manufacturing. Because of this, the company's profits are driven by the amount of work Tom does. If he works 40

Market value of the entire corporation, Company X is presumably doing well....

Company X is presumably doing well. The corporation's balance sheet last September 31 can be summarized as follows: Total Assets

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd