Double Exit

Consolidated financial statements are a fundamental part of advanced financial reporting and typically are one area that many accounting students struggle with. The transition from the preparation of single company financial statements (IAS1 based questions + adjustments) to consolidated financial statements can be difficult and while the fundamental principles (e.g. double entry, core financial statements) still apply, there are a collection of new concepts (e.g. goodwill, non-controlling interest, associate, equity method etc.) and new standards (e.g. IFRS 3,10,11 IAS 28) to get your head around. Notwithstanding this, there are a few key similarities when approaching a consolidation question the most important of which in the context of this post is having a tried and tested approach to attempting consolidation questions.

The purpose of this series of articles is not to provide a comprehensive overview of the area of consolidated financial statements but rather to focus on how to approach consolidation questions and, in particular in this post, to understand the different approaches to preparing consolidated financial statements and how they compare to each other.

 

Articles

The three articles in this series are as follows;

The main focus here will be on what I refer to as the “vanilla” consolidation questions – that is the preparation of the CSFOP, CSPLOCI & CSOCE with no disposals, cashflow statements or foreign operations. These various complications will be dealt with in further posts during the year.

 

 

Materials

The core article is available here (Approaches to Consolidation)

Example Question (CAP2 FR IA  Sept ’16 Q2 – available at CAI website using log in)

Example Solutions + Suggested Steps (Sept 16 Q2 Solutions)