1. Dr Marcin Jędrzejczyk

2. Consolidated accounts – an overview GROUP FINANCIAL STATEMENTS JOINTLY CONTROLLED ENTITY ASSOCIATE SUBSIDIARY 2

3. Consolidated accounts – an overview ASSOCIATEJOINTLY CONTROLLED ENTITY SUBSIDIARY Features Significant influence over the financial and operating policy decisions Joint control over the financial and operating policy decisions Control – power to govern the financial and operating policies Accounting treatment Equity method (IAS 28), share of net assets and profits Proportionate consolidation (benchmark) or equity method (IAS 31) IAS 22, IAS 27 3

4. Acquisition Method (1)  Parent Company has purchased 100% of Shares for 100 000 zl in Subsidiary Company. Net Assets Value equals 85000 zl at the date of acquistion. Using the given data prepare the consolidated balance sheet using the acquistion method. 4

5. Acquisition Method (2)  Parent Company has purchased 80% of Shares for 100 000 zl in Subsidiary Company. Net Assets Value equals 85000 zl at the date of acquistion. Using the given data prepare the consolidated balance sheet using the acquistion method. 5

6. Parent Company (P) (in zł) Subsidiary (S) (in zł) ASSETS Goodwill Property Plant and Equipment1 300 00060 000 Investment in S100 000 Long term receivables14 000 Inventories300 00030 000 Receivables130 00010 000 Cash150 00010 000 Other Commodities20 0005 000 TOTAL ASSTES2 000 000129 000 LIABILITIES + OE Owners Equity Share Capital1 100 00060 000 Supplementary Capital180 00020 000 Profit/loss20 0005 000 Reserves100 000 Long-term liablities420 00034 000 Liabilities180 00010 000 TOTAL LIAB. + OE2 000 000129 000 6

7. Proportionate Method  Parent Company has purchased 80% of Shares for 80 000 zl in JCE Company. Net Assets Value equals 85000 zl at the date of acquistion. Using the given data prepare the consolidated balance sheet using the proportionate consolidation. 7

8. Parent Company (P) (in zł) JCE (JCE) (in $) ASSETS Goodwill Property Plant and Equipment1 300 00060 000 Investment in S80 000 Long term receivables14 000 Inventories300 00030 000 Receivables150 00010 000 Cash150 00010 000 Other Commodities20 0005 000 TOTAL ASSTES2 000 000129 000 LIABILITIES + OE Owners Equity Share Capital1 100 00060 000 Supplementary Capital180 00020 000 Profit/loss20 0005 000 Reserves100 000 Long-term liablities420 00034 000 Liabilities180 00010 000 TOTAL LIAB. + OE2 000 000129 000 8

9. Uniting of Interest Method  Company P has purchased 80% of Shares for 80 000 zl in Associate Company. Net Assets Value equals 60000 zl at the date of acquistion. Using the given data prepare the consolidated balance sheet using the Uniting of Interest Method. 9

10. Parent Company (P) (in zł) ASSETS Goodwill Property Plant and Equipment1 300 000 Investment in S80 000 Long term receivables Inventories300 000 Receivables150 000 Cash150 000 Other Commodities20 000 TOTAL ASSTES2 000 000 LIABILITIES + OE Owners Equity Share Capital1 100 000 Supplementary Capital180 000 Profit/loss20 000 Reserves100 000 Long-term liablities420 000 Liabilities180 000 TOTAL LIAB. + OE2 000 000 10

11. Acquisition Method (1)  Parent Company has purchased 100% of Shares for 1 000 000 zl in Subsidiary Company. Net Assets Value equals $85000 at the date of acquistion. Using the given data prepare the consolidated balance sheet using the acquistion method. Exchange rate equals 3,5 zł/$. 11

12. Acquisition Method (2)  Parent Company has purchased 80% of Shares for 1 000 000 zl in Subsidiary Company. Net Assets Value equals $85000 at the date of acquistion. Using the given data prepare the consolidated balance sheet using the acquistion method. Exchange rate ewuals 3,5 zł/$. 12

13. Parent Company (P) (in zł) Subsidiary (S) (in USD) ASSETS Goodwill Property Plant and Equipment1 300 00060 000 Investment in S1 000 000 Long term receivables14 000 Inventories300 00030 000 Receivables130 00010 000 Cash150 00010 000 Other Commodities20 0005 000 TOTAL ASSTES2 900 000129 000 LIABILITIES + OE Owners Equity Share Capital1 100 00060 000 Supplementary Capital180 00020 000 Profit/loss20 0005 000 Reserves100 000 Long-term liablities420 00034 000 Liabilities1 080 00010 000 TOTAL LIAB. + OE2 900 000129 000 13