Consolidated Financial Statements And Their Scope Of Consolidation

Consolidated financial statement is an accounting statement based on the accounting statements made by parent company and subsidiary company, which are based on individual accounting statements separately prepared by parent company and subsidiary company.

Consolidated financial statements mainly include consolidated balance sheet, consolidated profit or loss statement or consolidated profit statement, consolidated profit distribution table and consolidated fund flow statement.

Like the individual accounting statements of enterprises, these consolidated accounting statements reflect the financial condition and operating results of the accounting entity of the enterprise group from different aspects, forming a complete consolidated accounting statement system.

According to the current system, when a real estate development enterprise set up in China is owned by one or more subsidiaries, the parent company should prepare consolidated financial statements and incorporate all the subsidiaries within and outside the control in the consolidated financial statements.

1. the parent company owns more than half of the invested enterprises (excluding half) of the equity capital, including: (1) the invested enterprises that directly own more than half of their equity capital; (2) the invested enterprises that indirectly own more than half of their equity capital; (3) the invested enterprises that have more than half of their equity capital in direct and indirect way.

Indirectly, more than half of the equity capital is owned by a subsidiary whose subsidiary owns more than half of its equity capital through its subsidiaries.

The direct and indirect way of owning more than half of its equity capital means that although the parent company owns only half of its equity capital, it has more than half of its equity capital through its subsidiaries.

2. other invested enterprises controlled by the parent company.

Although the parent company does not hold more than half of its equity capital in the invested enterprise, if the parent company has one of the following situations with the invested enterprise, it shall include the invested enterprise as a subsidiary of the parent company into the consolidated scope of the consolidated financial statements: (L) through the agreement with other investors of the invested enterprise, holding more than half of the voting rights of the invested enterprise; (2) according to the articles of association or agreement, it has the right to control the financial and operational policies of the invested enterprise; (3) the majority of the members of the similar power organizations have the power to appoint or remove the board of directors, and (4) more than half of the voting rights at the board of directors or similar authority meetings.

3. when the parent company makes consolidated financial statements, the following subsidiaries may not be included in the consolidated scope of consolidated financial statements: (1) subsidiaries that have been shut down and pferred; (2) a subsidiary which has been declared to be cleaned up according to bankruptcy proceedings; (3) a bankrupt subsidiary; (4) a subsidiary who is prepared to sell more than half of its equity capital in the near future; (5) a subsidiary whose owner's equity is not continuous; and (6) the host country.

Controls and other controls, restricted by external capital controls.

Provide consolidated statements of parent company and subsidiary's business activities.

Parent company

Creditors and managers not only want to know the company's own business, but also want to know the operation of their subsidiaries, so as to get information about their investment.

The investors of subsidiaries also want to know the operation and economic strength of the whole group, including the parent company and other subsidiaries.

Consolidated financial statements can meet these two needs.

Otherwise, they need to spend a lot of energy to collect and analyze the accounting statements of various companies.

To provide the entire enterprise group with a real financial position and profitability.

During the accounting period, a lot of pactions will take place between the parent company and the subsidiary company, including the project contracting, land pfer, material and product trading, labor supply, receivable and payable pactions, etc. these pactions are reflected in the accounts and statements of the companies. When compiling consolidated financial statements, the pactions between the subsidiaries and their subsidiaries and the parent company must be eliminated so as to avoid duplication of calculation and provide false information.

Therefore, consolidated financial statements reflect the true financial status and profitability of the whole enterprise group.

It is conducive to the internal management of the enterprise group and the state economic management department.

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By reading and analyzing consolidated accounting statements, the management can fully understand the source and allocation of funds for the whole enterprise group, so as to effectively plan and rationally allocate resources so as to make full use of limited resources.

At the same time, according to the information provided by the consolidated accounting statements, we can rationally adjust every business link of the enterprise group to ensure the profit maximization of the whole enterprise group.

According to the information provided by various enterprise groups, the state economic management department can understand the operation and profitability of various industries, adjust the state's industrial policies and carry out macroeconomic regulation and control.

However, because the consolidated financial statements are basically based on the statements of assets, liabilities and owners' rights and interests of all the companies of the enterprise group, as well as the statements of the total revenue and expenditure of each company, the structure of the rights and interests of each company is confused, and the profitability and solvency of each company can not be reflected.

Therefore, even if the consolidated accounting statements have been compiled, the accounting statements made by various companies can not be ignored.