Consolidated Financial Statements
- To acquire the ability to apply specific accounting standards and legislations to different transactions and events and in preparation and presentation of consolidated financial statements of various business entities
- . Define control (IFRS 10 Appendix A and IFRS 10.5-.18)
- Identify situations in which consolidated financial statements should be presentedand the scope of consolidated financial statements (IFRS 10.4).
- Account for business combinations by applying the acquisition method [IFRS 3.4-.53]
- Account for a business combination in which control is achieved in stages[IFRS 3.41-.42]
- Account for measurement period adjustments [IFRS 3.45-.50].
- Determine what forms part of a business combination [IFRS 3.51-.52].
- Test goodwill for impairment annually, or more frequently if events or changes incircumstances indicate that the asset might be impaired in accordance withIAS 36.10(b)
- Identify a business combination [IFRS 3.3].
- Introduction to groups.Discuss the history and motives for business combinations. Recognize when consolidation of financial information into a single set of statements is necessary. Define the term business combination and differentiate across various forms of business combinations. The concepts of control and ownership. Describe a variable interest entity, a primary beneficiary, and the factors used to decide when a variable interest entity is subject to consolidation.
- Consolidation principles and techniquesThe acquisition method/ How to determine the acquirer – who has control. Determine the total fair value of the consideration transferred for an acquisition and allocate that fair value to specific subsidiary assets acquired (including goodwill) and liabilities assumed or to a gain on bargain purchase. Fair value hierarchy/. Identifying principal am most advantageous market/ Discuss the rationale for the goodwill impairment testing approach. Describe the procedures for conducting a goodwill impairment test. Understand the accounting and reporting for contingent consideration subsequent to a business acquisition
- Consolidated Financial Statements with Non-controlling InterestDescribing the valuation principles underlying the acquisition method of accounting for the non-controlling interest. Allocating goodwill acquired in a business combination across the controlling and non-controlling interests. The computation and allocation of consolidated net income in the presence of a non-controlling interest. Identifying appropriate placements for the components of the non-controlling interest in consolidated financial statements. The impact on consolidated financial statements when a step acquisition has taken place. Recording the sale of a subsidiary (or a portion of its shares). Prepare the journal entry to consolidate the accounts of a subsidiary. Prepare a worksheet to consolidate the accounts of two companies that form a business combination
- Intra-group transactions.
- Accounting for associates.Describe in general the various methods of accounting for an investment in equity shares of another company. Identify the sole criterion for applying the equity method of accounting and guidance in assessing whether the criterion is met. Prepare basic equity method journal entries for an investor and describe the financial reporting for equity method investments. Allocate the cost of an equity method investment and compute amortization expense to match revenues recognized from the investment to the excess of investor cost of investee book value. Record the sale of an equity investment and identify the accounting method to be applied to any remaining shares that are subsequently held. Describe the rationale and computations to defer unrealized gains on intra-entity transfers until the goods are either consumed or sold to outside parties. Explain the rationale and reporting implications of the fair-value option for investments otherwise accounted for by the equity method.
- Consolidation of foreign operationsUnderstand concepts related to foreign currency, exchange rates, and foreign exchange risk. Explaining the difference between functional and presentation currency and adjustments for foreign currency transactions. Accounting for the translation of foreign currency transactions and monetary/non-monetary foreign currency items at the reporting date. Translate a foreign subsidiary's financial statements into its parent's reporting currency using the current rate method and calculate the related translation adjustment. Prepare a consolidation worksheet for a parent and its foreign subsidiary.
- Work Activity
- Written examThis is written, closed-book computer-based exam. The examination is on the LMS platform (https://lms.hse.ru). You need to connect to the exam according to the schedule. If you cannot take an exam, you must contact the instructor prior to the start of the exam. All questions in the exam are compulsory. The exam contains a mix of objective test with 20 multiple-choice questions (4 marks) and longer problem study for consolidation (6 marks) with a duration of 2 hours. The pass mark will be 40%. At all written exams the student has access to the basic IT application package (Microsoft Office), pen and paper Students are not allowed during the exam: to use lecture notes, internet resources and other hints. A momentary disruption of communication during the examination is considered to be a communication failure of less than one minute. Long-term disruption of communication during the examination is considered a violation of one minute or more. If there is a long-term disruption in communication, the student cannot continue to take the exam. The retake procedure involves the use of complicated tasks.
- Interim assessment (4 module)0.4 * Homework + 0.1 * Work Activity + 0.5 * Written exam
- Krimpmann, A. (2015). Principles of Group Accounting Under IFRS. Chichester, West Sussex, UK: Wiley. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=968959
- Association of Chartered Certified Accountants (Great Britain). (2017). ACCA (Vol. Tenth edition). Wokingham, Berkshire: BPP Learning Media. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=nlebk&AN=1516458
- BPP Learning Media (Firm). (2017). ACCA Paper F7 (Vol. Eleventh edition). London: BPP Learning Media. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsebk&AN=1515138