1. Advanced Financial Accounting
Lec-37

2. Group Accounts

3. Control
Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

4. Control
The parent company has owned more than 50% of subsidiary company (Each ordinary share capital has one voting right).
The parent company has power over more than 50% of the voting rights of subsidiary company by virtue of agreement with other shareholders of it.
The parent company has power to govern the financial and operating policies of subsidiary company by statute or under an agreement.
The parent company has power to appoint or remove a majority of the directors of subsidiary company.
The parent company has power to cast the majority of votes at meetings of the board of directors of subsidiary company.

5. Consolidated Accounts
Consolidated balance-sheet.
Consolidated income statement.

6. Assets = Owner’s equity + Liabilities

7. Owner’s Equity
Share capital.
Reserves.

8. Assets
Current assets.
Non current assets.

9. Liabilities
Current liabilities.
Non current liabilities.

10. Question Balance sheet As on 31 Dec. 2008 P (Rs) S (Rs) Fixed assets
1,000
400
Investment in S
500
----
Current assets
200
Total Assets
1,900
600
Share capital
1,200
300
Reserves
Current liabilities
100
Total liabilities & capital
The data will appear row wise
But after appearance each individual amount will be highlighted

11. Question
The parent Co. (P) acquired 100% shares of the subsidiary Co. (S) on 31st December 2008.
Required: Prepare the Consolidated Balance Sheet as on the same date.

12. Consolidated Balance Sheet
Solution
Consolidated Balance Sheet
As at December 2008
(Rs)
Fixed assets
1,400
Current assets
600
Total assets
2,000
Share capital
1,200
Reserves
500
Current liabilities
300
Total liabilities & capital
The data will appear row wise but with highlighter

13. Balance Sheet As on 31st December 2008
Question
Balance Sheet As on 31st December 2008
P (Rs)
S (Rs)
Fixed assets
1,000
400
Investment in S
500
----
current assets
200
Total Assets
1,900
600
Share capital
1,200
300
Reserves
150
Current liabilities
Total liabilities & capital
The data will appear row wise
But after appearance each individual amount will be highlighted
The parent Co. (P) acquired 100% shares of the subsidiary Co. (S) on 31st December 2008.
Required: Prepare the Consolidated Balance Sheet as on the same date.

14. Consolidated Balance Sheet
Solution
Consolidated Balance Sheet
As at December 2008
(Rs)
Fixed assets
1,400
Goodwill 50
Current Assets
600
Total assets
2,050
Share capital
1,200
Reserves
500
Current liabilities
350
Total liabilities & capital
The data will appear row wise but with highlighter

15. Goodwill Cost of investment 500 Net assets of S Co. Acquired (450)