consolidated and

separate

financial statement
Presented By:
Karez I. Kareem
Supervised By: Prof.Dr. Mehmet Civan

Parent
company
BROTHER

SEPARATE

SON
IAS A

SISTER
IAS B

IAS C

---0

---0

---0

---0

---0

---0

---0

---0

---0

---0

---0

---0

---0

---0

---0

PARENT
COMPANY
IAS

Consolidation

son

sister

brother

----

----

0 ----

0 ----

----

----

0 ----

0 ----

----

----

0 ----

0 ----

----

----

0 ----

0 ----

----

----

0 ----

0 ----

Definition of Consolidated
Financial
Statements
Consolidated financial statements are the financial
statements of a group in which the assets, liabilities, equity,
income, expenses and cash flows of the parent and its
subsidiaries are presented as those of a single economic
entity.
.

Definition of Separate
Financial
Statements
A Separate financial statements are those presented in
addition to consolidated financial statements or in addition to
financial statements in which investments in associates or
joint ventures are accounted for using the equity method.
Separate financial statements need not be appended to, or
accompany, those statements.

Control
In evaluating whether an entity has control over another
entity it must first be ascertained whether the entity has the
power to participate in the financial and operating policy
decisions of the other entity. Control is presumed to exist
when the parent owns directly or indirectly, through
subsidiaries, more than half of the voting power of an entity.
In some instances this will be clear-cut. However, in other
circumstances, such ownership may not constitute control.

Non-controlling interest
non-controlling interest is measured using either the fair
value method or the proportionate share method. The
difference between the two is that with the fair value
method, in calculating acquisition date goodwill, the noncontrolling interests stake in the entity is valued at fair value
and this is used along with what the parent paid to acquire
its stake in the subsidiary to calculate goodwill arising on 100
per cent of the subsidiary.

GoodWill
Good will frequently is recognized in purchase-type business
combinations because the total cost of the combine exceeds
the current fair value of identifiable net assets of the
combine. the amount of goodwill recognized on the date the
business combination is consummated may be adjusted
subsequently when contingent consideration become
issuable.

Consolidation Procedures
The consolidated financial statements present
financial information about the group as a single
economic entity. In preparing consolidated financial
statements, an entity shall:

A_ combine the financial statements of the parent

and its subsidiaries line by line by adding together
like items of assets, liabilities, equity, income and
expenses.
B_ eliminate the carrying amount of the parents
investment in each subsidiary and the parents
portion of equity of each subsidiary.

C_ measure and present non-controlling interest in

the profit or loss of consolidated subsidiaries for the
reporting period separately from the interest of the
owners of the parent.
D_ measure and present non-controlling interest in
the net assets of consolidated subsidiaries separately
from the parent shareholders equity in them.

Question : 1
Entity A owns a 60 per cent voting interest in Entity B and a
10 per cent voting interest in Entity C. Entity B owns a 30
per cent voting interest in Entity C. How should Entity A
account for its investment in Entity C in its consolidated
financial statements?
(a) As a subsidiary, because Entity A controls Entity C.
(b) As an associate.
(c) As an associate, if significant influence can be
ascertained.

Question : 2
Entity A owns a 60 per cent voting interest in Entity B and a
10 per cent voting interest in Entity C. Entity B owns a 50
per cent voting interest in Entity C. How should Entity A
account for its investment in Entity C in its consolidated
financial statements?
(a) As a subsidiary, because Entity A controls Entity C.
(b) As an associate.
(c) As an associate, if significant influence can be
ascertained.

problem :
consolidation procedures
On 31 December 20X0 Entity A acquired all of the ordinary
shares, which carry voting rights at a general meeting of
shareholders, of Entity B for CU6,000(4) in cash and it
controlled Entity B from that date. The acquisition-date
statements of financial position of Entities A and B and the
fair values of the assets and liabilities recognized on Entity
Bs statement of financial position were:

Entity A
Carrying
amount
CU
Assets
Non-current assets
Building and other PPE
Investment in Entity B
Current assets
Inventories
Trade receivables
Cash
Total assets

7,000
6,000
13,000
700
300
1,500
2,500
15,500

Entity B
Carrying
amount
CU

3,000

Fair
value
CU

3,300

3,000
500
250
700
1,450
4,450

600
250
700

Equity and liabilities

Equity
Share capital
Retained earnings
Current liabilities
Trade payables
Total liabilities and equity

5,000
10,200
15,200
300
300

2,000
2,300
4,300
150
150

15,500

150
4,450

For One Company

SME
Carrying
amount
CU
Assets
Non-current assets
Buildings
Investment in SME B
Current assets
Inventories
Trade receivables
Cash
Total assets

1,000
900 +
1,900
200
400
500
1,100
3,000

Equity and liabilities

Equity
Share capital
Retained earnings
Current liabilities
Trade payables
Total liabilities and equity

800
1,400
2,200
800
800
3,000

Combination For Two Company

Column: A
E

B
Entity A

C
Entity B

D
Consolidation

Consolidation
adjustments

(ie Column

B+
Carrying
amount
CU
Assets
Non-current assets
Goodwill
1,300 Buildings and other PPE
10,300 Investment in Entity B
13,000

Carrying
amount
CU

Column C+
column D)
CU

1,300(a)
7,000
6,000

3,000
3,000

300
(6,000)

Current assets
Inventories
1,300
Trade receivables
Cash
4,050
Total assets

700
300
1,500
2,500
15,500

Equity and liabilities

Equity
Share capital
5,000
Reserves
10,200
Total equity
15,200 +
15,200 +
Current liabilities
Trade payables

300
300 +

500

100

250
700
1,450

550
2,200

4,450

15,650

2,000
2,300
4,300

150
150

(2,000)
(2,300)

5,000
10,200

450

For two company

Carrying
amount

SME A
Fair
value

SME B
Consolidation
adjustments

Consolidated
CU

CU

CU

CU
Assets
Non-current assets
Goodwill
Buildings
Investment in SME B

100(a)
1,000
900
1,900 +

700

200

100

(900)
700 +

1,800
Current assets
Inventories
300 Trade receivables
700 Cash
650

400
300
500
150
1,100 +

550 +

100
1,700
-

Equity and liabilities

Equity
Share capital
Retained earnings
1,400
2,200
Current liabilities
Trade liabilities

Total liabilities and

equity
3,450

800
1,400
2,200 +

800
800 +

3,000 =

600
200
800 +

(600)

800
(200)

450
450 +

1,250 =

1,250
1,250

(800)

First Book :
Modern Advanced Accounting
by: LARSEN

second Internet :
1_ IAS 27 Consolidated and Separate Financial Statements
www.iasplus.com/en/standards/ias/ias27

2_ Consolidated and Separate Financial Statements - IFRS

www.ifrs.org/IFRS-for-SMEs/.../Module%209_version
%202013.pdf

3_
IAS 27: Separate financial statements | Accounting ... - ICAEW
www.icaew.com/en/library/subjectgateways/accounting.../ifrs/ias-27

4_
IAS 27 (2003/2008) Consolidated and Separate Financi
al ...
www.icaew.com/.../financial-reporting/.../ias-272003-2008-consolidated...
5_ IAS 27 Consolidated and Separate Financial Statements