...Object: Report on issues concerning consolidated financial statements The following report deals with the issues and problems concerning the consolidated financial statements. The first concern was about the meaning of deferred income taxes and deferred tax assets. As you know, the accounting income in income statement may be not equal to the taxable income in tax reporting. This can be explained by the fact that the rules in accounting and in tax regulations may differ. Often differences in the timing of the recognition of revenues and expenses occur. These differences lead to a gap between tax payable and tax expense and create temporary differences. A temporary difference is called taxable when it creates a future amount of tax payable. It is called deductible on the opposite side. IAS 12 requires that these temporary differences be recognized in the balance sheet using the Balance Sheet Liability method. Under this method, for each asset and liability a comparison is made between the tax base, i.e. the amount associated for tax purposes, and the amount recorded on the balance sheet. Then, temporary differences are recognized. For example, in the case of a deferred income tax, the amount on the balance sheet is greater than its tax base. So tax expense exceeds tax payable. Thus, a taxable temporary difference appears. In the income statement, a liability equal to the amount of this difference is recorded as a deferred income tax. On the contrary, a deferred...
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...or services used in the process of earning revenues. Instead, dividends are considered a distribution of earnings to stockholders. Summary The transactions of NetSolutions are summarized below. Each transaction is identified by letter, and the balance of each item is shown after every transaction. Assets Liabilities Stockholders’ Equity Accounts Capital Fees Wages Rent Supplies Utilities Misc. Cash Supp. Land Payable Stock Dividends Earned Exp. Exp. Exp. Exp. Exp. a. 25,000 25,000 b. 20,000 20,000 Bal. 5,000 20,000 25,000 c. 1,350 1,350 Bal. 5,000 1,350 20,000 1,350 25,000 d. 7,500 7,500 Bal. 12,500 1,350 20,000 1,350 25,000 7,500 e. 3,650 2,125 800 450 275 Bal. 8,850 1,350 20,000 1,350 25,000 7,500 2,125 800 450 275 f. 950 950 Bal. 7,900 1,350 20,000 400 25,000 7,500 2,125 800 450 275 g. 800 800 Bal. 7,900 550 20,000 400 25,000 7,500 2,125 800 800 450 275 h. 2,000 2,000 Bal. 5,900 550 20,000 400 25,000 2,000 7,500 2,125 800 800 450 275 Nov. 30, 2009 NetSolutions pays $2,000 to stockholders (Chris Clark) as dividends. Copyright 2009 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Licensed to:Chapter 1 Introduction to Accounting and Business 15 You should note the following in the preceding summary: 1. The effect of every transaction is an increase or a decrease in one or more of the accounting equation elements. 2. The two...
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...Method Relates to Consolidated Financial Statements As we'll see, the equity method is in many ways a partial consolidation. If a company acquires more than 50% of the voting stock of another company, it's said to have a controlling interest, because by voting those shares, the investor actually can control the company acquired. The investor is referred to as the parent; the investee is termed the subsidiary. For reporting purposes (although not legally), the parent and subsidiary are considered to be a single reporting entity, and their financial statements are consolidated. Both companies continue to operate as separate legal entities and the subsidiary reports separate financial statements. However, because of the controlling interest, the parent company reports consolidated financial statements. p. 645 Consolidated financial statements combination of the separate financial statements of the parent and subsidiary each period into a single aggregate set of financial statements as if there were only one company - combine the separate financial statements of the parent and the subsidiary each period into a single aggregate set of financial statements as if there were only one company. This entails an item-by-item combination of the parent and subsidiary statements (after first eliminating any amounts that are shared by the separate financial statements).28 For instance, if the parent has $8 million cash and the subsidiary has $3 million cash, the consolidated balance sheet...
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...A comparative studies of consolidated financials Table of Contents: 1. A. Description of Expanded accounting equation for Hal Burton Web consulting for the period of 1-30, 2015 B. Basic and consolidated financial statements of Hal Burton Web consulting for the period of 1-30, 2015 1. Income Statement. 2. Statement of financial position 3. Statement of owner’s equity 4. Statement of Cash Flows. 2. A. Requirements of International Accounting Standards (IAS-1) and its comparison with US-GAAP for the presentation of financial statements. B. Supporting examples of financial statements prepared under IFRS and US GAAP References. 1) A. Analyze and summarize the below transactions using the accounting equation in the form of a table showing different assets, liabilities, capital, revenue and expenses. Table 1. Expanded Accounting Information | | | |Hal Burton Web | | | | |Consulting | | | Statement of Owners Equity | | | | ...
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...IN FOCUS LEARNING OBJECTIVES IFRS 10 Consolidated Financial Statements After studying this chapter, you should be able to: 1 explain the meaning of consolidated financial statements 2 discuss the meaning and application of the criterion of control 3 discuss which entities should prepare consolidated financial statements 4 understand the relationship between a parent and an acquirer in a business combination 5 explain the differences in disclosure requirements between single entities and consolidated entities. CHAPTER 23 Consolidation: controlled entities Prepared for Rotterdam School of Management 429 813 INTRODUCTION The purpose of this chapter is to discuss the preparation of a single set of financial statements, referred to as the consolidated financial statements. The preparation of consolidated financial statements involves combining the financial statements of the individual entities in a group so that they show the financial position and financial performance of the group of entities, presented as if they were a single economic entity. The first issue covered in this chapter is the determination of which entities are required to prepare consolidated financial statements. This involves a discussion of the criterion for consolidation and its application to economic situations. The second issue in this chapter is the accounting procedures for preparing the consolidated financial statements. The application in this chapter is to a very...
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...Form 8-K is a very broad form used to notify investors of any unscheduled material event that is important to shareholders or the SEC. Form 10-K : is an annual report required by the U.S. Securities and Exchange Commission (SEC), that gives a comprehensive summary of a public company‘s performance. Although similarly named, the annual report on Form 10-K is distinct from the often glossy “annual report to shareholders”, which a company must send to its shareholders when it holds an annual meeting to elect directors (though some companies combine the annual report and the 10-K into one document). The 10-K includes information such as company history, organizational structure, executive compensation, equity, subsidiaries, and audited financial statements, among other information. Form 10-KSB: Similar to the SEC Form 10-K, the Form 10-KSB contains crucial information for investors researching potential investments. This is especially true with the companies that file the Form 10-KSB since the stocks of these small companies most often trade as “penny stocks.” Consequently, they do not receive significant coverage by third-party analysts. GENERAL MOTORS CORPORATION AND SUBSIDIARIES CONSENT OF INDEPENDENT AUDITORS The Board of Directors General Motors Corporation: We consent to the incorporation by reference of our report on page II-20 dated January 16, 2003 (March 12, 2003 as to Note 26) and of our report in Section IV...
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...When consolidated financial statements must be prepared (Section 1.4.1) For a detailed discussion on which entities must prepare consolidated financial statements refer to section 1.4.1 of the text. AASB 127.Aus 1.1 applies to: a) each entity that is required to prepare financial reports in accordance with Part 2M.3 of the Corporations Act and that is a reporting entity (b) general purpose financial statements of each other reporting entity, and (c) financial statements that are, or are held out to be, general purpose financial statements Chapter 2M.3 s292 states: (1) A financial report and a directors' report must be prepared for each financial year by: (a) all disclosing entities; and (b) all public companies; and (c) all large proprietary companies; and (d) all registered schemes. Small proprietary companies (2) A small proprietary company has to prepare the financial report and directors' report only if: (a) it is directed to do so under section 293 or 294; or (b) it was controlled by a foreign company for all or part of the year and it is not consolidated for that period in financial statements for that year lodged with ASIC by: (i) a registered foreign company; or (ii) a company, registered scheme or disclosing entity. The general requirement to prepare consolidated financial statements is dealt with by AASB 127.Aus10.1 Notwithstanding paragraph 10, the ultimate Australian parent shall present consolidated financial statements that...
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...Auto Industry Ford – Tata Motors Financial Statements Identification Activity Required: Working within your assigned group, identify the following items in the Ford and Tata’s financial reports. Answer each of the following questions and identify where in the financial report (which statement, footnote, etc.) you located it and the specific page number. Take your time in completing this process, as the objective of the assignment is to familiarize you with the specific set of accounting statements you will be using throughout the semester. 1. Who is Ford’s/Tata Motor’s auditor? Ford’s auditor is Pricewaterhousecoopers. Page 270 in Exhibit 23 Tata Motor’s auditor is Deloitte Haskins & Sells. Page 107 in Table of Contents Item 16c 2. What set of accounting standards do each apply in preparing its financial reports? Ford: US GAAP. Page 74 Part 1 Item 7 Tata Motors: IFRS. Page 107 Item 16c 3. What form does each use to file its financial information with the SEC? Ford: Annual report pursuant to Section 13 or 15. Form 10K Tata: ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d). Form 20F 4. Within the financial report itself, where is the auditors’ report located? Ford: FS – 106 Tata: F2 5. What are the fiscal years included/covered within the two financial reports? Ford: 2010 Form 10-k Tata: 2011 Form 20-F 6. How long (number of pages) is each financial report, not including the “management’s discussion and analysis” (MD&A) Ford: 99 Tata: 101 7. Identify...
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...Saipem S.p.A. is an Italian oil and gas industry contractor (also “Saipem” hereafter). The firm is a subsidiary of ENI S.p.A., the largest Italian energy company, which currently holds a 42.93% share in Saipem. The listed competitor of the firm assigned to me that I choose is Schlumberger Limited (also “Schlumberger” hereafter). In the World’s Top 10 biggest oilfield services companies list, Schlumberger is the top 1 biggest company and Saipem is the top 3 biggest company; furthermore both companies are listed. For these reasons, we can consider those companies as proper peers. We collected the 2014 Annual Report for both companies. The Annual Reports, retrieved from the Investors section in the related official websites, show the consolidated figures as of December 31, 2014 and the comparative data for the year 2013. Saipem is one of the largest turnkey contractors in the oil and gas industry. Founded in 1957 as service provider to ENI, the company has made its name handling the oilfield services for a number of challenging projects both on and offshore. With over 30,000 employees, the company operates in all the major oil and gas producing nations, the company has earned a reputation in the industry for achieving results. Saipem own and operate over 50 vessels that deal with all aspects of offshore construction and services activities including drilling and pipe laying. The company has a number of high profile contracts in the Middle East and works with most major NOCs including...
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...Review Of Financial Statements Category: Miscellaneous Autor: anton 26 June 2011 Words: 1546 | Pages: 7 Introduction It is said that companies will come and go, and those that survive and left standing will teach other companies, how their survived. We will take two companies; UPS and Ebay, Inc break them down and show you how they got their start. In our paper, it will also be discussed and show a review of their financial statements from each one. The point is to get a better picture of where a company started, the competition it endured, and the money that was possibility projected for the start. This paper will also show how auditors are essential to the running of any company. Review of Financial Statements Brief overview UPS, a delivery service, has been around for about 100 years. James E. Casey started the company on $100 borrowed from a friend of his. Casey, who was 19 years old when he started UPS, had worked for delivery services before and wanted to start a better delivery system of his own. The American Messenger company, what UPS was previously called, started in Seattle, Washington and had many competitors in the beginning. His business not only survived among them, but thrived (UPS, n.d.). Today the company serves over 200 countries delivering “goods, funds, and information” (UPS, n.d., ¶ 1). UPS has several stores located in these countries, including the United States, where people can not only have their packages sent, but they can also...
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...Introduction 1 1.1 Economics of F&N Holdings Berhad 1 2.0 The Users of Financial Statements and Their Information Needs 4 3.0 Discussion of Standards Related to Consolidation and its Actual Presentation 6 4.0 Conclusion 14 Reference 16 List of Diagrams Exhibit 1 Group Structure & Summary of Ownership Interests in Subsidiary Exhibit 2(a) Disclosure of Ownership Interest in Subsidiaries Exhibit 2(b) Disclosure of Ownership Interest in Subsidiaries Exhibit 3 Consolidated and Separate SOPL Exhibit 4 Consolidated and Separate Statements of Comprehensive Income Exhibit 5(a) Consolidated SOFP Exhibit 5(b) Separate SOFP Exhibit 6 Consolidated SOCIE Exhibit 7 Separate SOCIE Exhibit 8 Consolidated and Separate SOCF Exhibit 9 Disclosure about Reporting Date Exhibit 10 Acquisition Method of Business Combinations Exhibit 11 Comparisons of Investment in Subsidiaries of 2 years Exhibit 12 Goodwill as Intangible Assets and Computations Exhibit 13(a) Goodwill Recognized on Acquisition Date Exhibit 14 Goodwill shown in Intangible Assets Exhibit 15 Investment in A Joint Venture Exhibit 16 Equity Method of Joint Venture Exhibit 17 Adjustments to CSOFP for MFRS 11 Adoption Exhibit 18 Adjustments to CSOCIE & CSOCF for MFRS 11 Adoption Exhibit 19 Adjustments to SOFP, and SOCF for MFRS 11 Adoption Exhibit 20 Summary of Financial Information...
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...1a) What should the auditor consider when determining whether an account should be considered significant? ANSWER: The auditor should consider planning materiality. When a financial statement account exceeds the planning materiality, that account should be considered significant for both the audit of internal control over financial reporting and the financial statement audit. The more the account exceeds planning materiality, the greater it should be considered significant. 1b) What qualitative factors might cause an account that is otherwise relatively small quantitatively to be considered significant? ANSWER: AS #5 paragraph 29. Qualitative factors include: * Size and composition of the account; * Susceptibility to misstatement due to errors or fraud; * Volume of activity, complexity, and homogeneity of the individual transactions processed through the account or reflected in the disclosure; * Nature of the account or disclosure; * Accounting and reporting complexities associated with the account or disclosure; * Exposure to losses in the account; * Possibility of significant contingent liabilities arising from the activities reflected in the account or disclosure; * Existence of related party transactions in the account; and * Changes from the prior period in account or disclosure characteristics. 1c) What qualitative factors might cause an account that is greater than materiality to be considered not significant? ANSWER: Accounts...
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...CASE 1.9 ZZZZ Best Company, \nc. On May 19,1987, a short article in The Wall Street Journal reported that ZZZZ Best Company, Inc., of Reseda, California, had signed a contract for a $13.8 million insurance restoration project. This project was just the most recent of a series of large restoration jobs obtained by ZZZZ Best (pronounced "zee best"). Located in the San Fernando Valley of southern California, ZZZZ Best had begun operations in the fall of 1982 as a small, door-ta-door carpet cleaning operation. Under the direction of Barry Minkow, the extroverted 16-year-old who founded the company and initially operated it out of his parents' garage, ZZZZ Best experienced explosive growth in both revenues and profits during the first several years of its existence. In the three-year period from 1984 to 1987, the company's net income surged from less than $200,000 to more than $5 million on revenues of $50 million. When 72ZZ Best went public in 1986,Minkow and several of his close associates became multimillionaires overnight. By the late spring of 1987,the market value of Minkow's stock in the company exceeded $100 million, while the total market value of 72ZZ Best surpassed $200 million. The youngest chief executive officer in the nation enjoyed the "good life;which included an elegant home in an exclusive suburb of Los Angeles and a fire-engine red Ferrari. Minkow's charm and entrepreneurial genius made him a sought-after commodity on the television talk show circuit and caused...
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...Home Depot Financial Statements Home Depot a hardware box chain store throughout the United States has released their 2007, 2008, and 2009 annual reports. Within Home Depots, annual reports, are financial statements that will assist in analyzing the financial standings of Home Depot from 2007 to 2009. Taking a more in-depth look at the financials statements below, which includes consolidated statements of earning, balance sheet, and cash flow helps better to understand the internal and external use of each statement. As well as analyzing how a company makes decisions based on the financial information on the statements. Consolidated Statements of Earnings Home Depot's income statement is a mirror of their expenditures versus income that will tell if Home Depot is making a profit or in a financial bind. Within the consolidated statements, are net sales that are a tool to deceiver what the company’s cost of goods are and expenses that are a percentage of the net sales. After analyzing the three principal components cost of goods, expenses, and net sales a company can make financials decisions. These decision includes whether to increase or decrease costs or cost of goods based on the companies income for a said period or at the end of the fiscal year. For example, if Home Depot were to make some cuts due to down sales then analyzing cost of goods could help to make up for low sales. A company may pull merchandise from their warehouse or only order essential items to...
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...Find the company’s financial statements in the section of the website for investors. Post a link to the statements. What did you find interesting about each of the four financial statements, which include balance sheets, income statements, statements of cash flows, and statements of owners’ equity? How could the information in those statements be useful to an investor and to a manager? I do not really have a favorite company. Being a car enthusiast, I do pay close attention to the automotive industry. Out of the three major U.S. auto makers, Ford Motor Company is the only one who did not accept government bailout money, further enforcing the fact that the company can stand on its own two feet. This makes Ford my favorite company out of the three. The following information is based on the financial statements of Ford Motor Company which can be found in Ford’s annual report located at http://corporate.ford.com/doc/2011_annual_report.pdf. Ford’s annual report contains both a consolidated balance sheet and a sector balance sheet; both consolidated and sector cash flow statements, and consolidated statement of equity. The report contains no income statements. The financial statements of Ford Motor Company follow a traditional format. The information contained in financial statements can be beneficial to both investors and managers. When making a financial investment in a company, it is important to know how healthy the company is financially. The financial history is also...
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