Points To Note In Consolidated Financial Statements

Consolidated financial statements, also known as consolidated financial statements, refer to accounting statements that reflect the overall financial position, operating results and capital flow of enterprises in a certain period or place in a comprehensive way.

It mainly includes the consolidated balance sheet, the consolidated profit and loss statement (or the consolidated income statement), the consolidated profit distribution table, the consolidated cash flow statement (or the consolidated income statement), the consolidated profit distribution table, the consolidated cash flow statement (or the statement of changes in financial position).

Consolidated statements are made by the holding company (parent company) in the enterprise group at the end of the accounting year, mainly serving the shareholders and creditors of the parent company; but others believe that they serve all shareholders and creditors of the enterprise group, including shareholders with minority stock ownership.

The consolidated accounting statement considers the enterprise group as an accounting entity, reflecting the assets it controls, the liabilities it undertakes, the income realized and the expenses that happen.

China's enterprise group is not the main body of tax payment. Consolidated financial statements are not the basis for enterprises to distribute profits, including income tax and dividend distribution. They only have the function of providing information about the overall operation of enterprises.

When an enterprise (i.e. a holding company) actually controls the financial and business principles of the invested enterprise, the former should prepare consolidated financial statements to incorporate the controlled subsidiaries and the actually controlled investment enterprises into the consolidated financial statements.

Some people believe that if the subsidiary company is very different from the parent company in terms of its nature of operation, the consolidated financial statements are of little significance and can not be merged. Others believe that consolidated financial statements reflect the overall business situation of the enterprise group, and the accounting reports can be incorporated in all the member enterprises regardless of the nature of the operation. Therefore, all subsidiary companies should be incorporated into the scope of merger.

The Interim Provisions on consolidated financial statements issued by the Ministry of Finance in China have no specific provisions on this.

For the purpose of compiling and merging

The parent company shall unify the accounting policy, accounting statement final account date, accounting period and bookkeeping standard currency of the subsidiary company, and convert the accounting statements made by foreign subsidiaries in foreign currencies to the accounting statements of the parent company's bookkeeping standard currency according to certain exchange rates.

The parent company should adopt the equity capital of its subsidiaries.

Processing.

There are generally two theories for preparing consolidated financial statements, that is, parent company theory and entity theory. There are two ways to choose, namely, purchase method and equity combination method.

In practice, most of the contemporary theories are revised.

There are limitations in the combination of accounting statements with your colleagues.

This is manifested in: (1) the creditor's claim for the creditor's claim of the parent company and the subsidiary is usually directed against the independent legal body, not for the enterprise group as an economic entity, which is reflected in the consolidated statement.

It can not satisfy the repayment requirements of the parent and subsidiary creditors.

(2) consolidated financial statements combine the individual accounting statements of the parent company and its subsidiaries, and the minority shareholders of the subsidiary can hardly get the useful information they need from them directly, such as the information of their subsidiary investment.

(3) profit distribution includes the distribution of dividends to shareholders. It is based on individual accounting statements. Consolidated financial statements can not be used for shareholders' prediction and evaluation reports. Consolidated financial statements can not provide evidence for shareholders to predict and evaluate the future distribution of dividends by parent companies and all subsidiaries.

The procedures for preparing consolidated statements generally include: (1) check and adjust errors and omissions in the accounting statements of parent and subsidiary companies.

(2) offset the unrealized gains and losses in intra group pactions.

(3) offsetting the statutory surplus reserve, statutory public welfare fund and any surplus surplus extracted by a subsidiary for net profit.

(4) offset the investment income and dividends received by the parent company from the subsidiary, and adjust the balance of the equity investment account of the parent company to the initial period.

(5) counterbalance the balance of the accounts of the parent company's equity investment accounts and the subsidiary owners' rights and interests of the parent company at the beginning of the year, and confirm the difference between the two as the combined price difference; if there is a minority stake, the minority shareholders' rights and interests of the corresponding part should also be confirmed.

(6) divide the consolidated price differentials into the difference and goodwill between the fair value and the book value of the net assets of the subsidiary companies, and allocate and amortize them within their useful years.

The Interim Provisions of consolidated financial statements in China do not choose, divide, allocate and amortize the difference in the consolidated price. Instead, they are directly listed in the "long term investment" in the consolidated balance sheet.

(7) if a minority stake is established, the net profit of the subsidiary company that belongs to minority shareholders in the consolidated working papers should be increased correspondingly.

(8) offset accounts receivable and other pactions between mother and subsidiary.

Under the condition of computerized accounting, the users define the relevant conditions of consolidated financial statements according to the requirements of accounting and accounting statements. The software completes the automatic completion of accounting items according to the neon pmission and data calculation formula defined in the definition and the accounting statements.

The software can automatically deduct the influence of internal exchanges and internal investments of various companies, and be able to make necessary offset treatment for certain reporting items.