Wondershare EdrawMind
MindMap Gallery CPA Chapter 27 Consolidated Financial Statements (2023)
- 47
CPA Chapter 27 Consolidated Financial Statements (2023)
CPA, certified public accountant, accounting, consolidated financial statements, 2023, detailed introduction, comprehensive knowledge, I hope it can be helpful to everyone!
Edited at 2024-03-21 22:56:52
- bacteria
This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
- Plant asexual reproduction
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
- Reproductive development of animals
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
CPA Chapter 27 Consolidated Financial Statements (2023)
- bacteria
This is a mind map about bacteria, and its main contents include: overview, morphology, types, structure, reproduction, distribution, application, and expansion. The summary is comprehensive and meticulous, suitable as review materials.
- Plant asexual reproduction
This is a mind map about plant asexual reproduction, and its main contents include: concept, spore reproduction, vegetative reproduction, tissue culture, and buds. The summary is comprehensive and meticulous, suitable as review materials.
- Reproductive development of animals
This is a mind map about the reproductive development of animals, and its main contents include: insects, frogs, birds, sexual reproduction, and asexual reproduction. The summary is comprehensive and meticulous, suitable as review materials.
- Recommended to you
- Outline
Chapter 27 • Consolidated Financial Statements
scope
Determine the scope of consolidation based on “control”
1. Control: means that the investor has power over the investee, enjoys variable returns by participating in the investee’s relevant activities, and has the ability to use its power over the investee to affect the amount of its returns.
Power: voting rights or structured entity
2. In actual work, when judging whether it can control the investee, the investor should comprehensively consider:
1) The establishment purpose and design of the investee; (the basis of analysis)
2) Related activities of the investee and how to make decisions on related activities;
3) Whether the rights enjoyed by the investor currently enable it to dominate the relevant activities of the investee;
4) Whether the investor enjoys variable returns by participating in the relevant activities of the investee;
5) Whether the investor has the ability to use its power over the investee to affect its return amount;
6) Relationship between investors and other parties
The parent company is an investment entity: only the subsidiaries that provide services are included in the scope of consolidation, and other subsidiaries are not included in the consolidation. (Investments in other subsidiaries are measured at fair value and changes are included in current profits and losses)
Note: The parent company is not an investment entity, and all entities it controls, including investment entities and entities indirectly controlled through investment entities, should be included in the scope of consolidation.
Preparation principles, preliminary preparation matters and procedures
Specific principles:
1. Prepare based on individual financial statements;
2. Integration principle; (the parent company & all subsidiaries as a whole are regarded as one accounting entity)
3. Principle of importance.
constitute
1. Consolidated Balance Sheet
A statement reflecting the financial position of the parent company & subsidiaries group on a specific date
2. Consolidated income statement
A statement that reflects the operating results of the parent company & subsidiaries as a whole within a certain period of time
3. Consolidated statement of changes in shareholders’ equity (or consolidated statement of changes in shareholders’ equity)
Reflect the increase or decrease in the owner's equity of the parent company within a certain period
4. Consolidated Cash Flow Statement
Reflect the parent company & subsidiaries, the group’s cash inflows, outflows, and changes in net cash increases and decreases during a certain period
5. Notes
Preparatory matters in the early stage of preparation
1. Unify the accounting policies of parent and subsidiary companies (2 methods: a. Adjustment, b. Require subsidiary companies to re-prepare)
2. Unify the balance sheet date & accounting period of the parent and subsidiary companies (2 methods: a. Adjustment, b. Require the subsidiary to be re-prepared)
3. Translate the financial statements of subsidiaries in foreign currencies
4. Collect relevant information for preparing consolidated financial statements
The parent company shall promptly provide the following information to the subsidiary upon request:
1. Financial statements of the subsidiary for the corresponding period;
2. Information on internal purchase and sale transactions, credits and debts, investments and cash flows generated with the parent company and other subsidiaries, opening and closing balances and changes in unrealized internal sales profits and losses, etc.;
3. Information on changes in owner's equity and profit distribution of subsidiaries;
4. Other information
programming
1. Set up merge workpapers. (report item)
2. Addition of parent company & subsidiary data = total;
3. Total ± preparation of adjusting entries & offsetting entries = consolidated number;
4. Complete the consolidated financial statements.
Format
1. Consolidated Balance Sheet
①Owner’s equity → Increase: “Total owner’s equity attributable to the parent company” (reflecting the portion of the group’s owner’s equity attributable to the parent company’s owner’s equity; including: paid-in capital (or share capital), other equity instruments, capital Amounts of public reserves, treasury shares, other comprehensive income, surplus reserves, undistributed profits, etc.)
②Owner's equity → Increase: "Minority shareholders' equity", used to reflect the share of the owner's equity of non-wholly owned subsidiaries that does not belong to the parent company.
2. Consolidated income statement
①Net profit → Increase: “net profit attributable to owners of the parent company” & “minority shareholders’ profit and loss”
② The merger of enterprises under common control adds subsidiaries, and the "net profit" in the current consolidated income statement increases: "Of which: the net profit realized by the merged party before the merger"
③Total comprehensive income → Increase: “Total comprehensive income attributable to owners of the parent company” & “Total comprehensive income attributable to minority shareholders”
3. Consolidated cash flow statement
Format is basically the same
4. Consolidated Statement of Changes in Owners’ Equity
Increase “minority interests”
Summary of entries for Year 2:
1. Things are there → write normally
2. Things are not there → Undistributed profits at the beginning of the year
3. Profit and loss items → Undistributed profits at the beginning of the year
Merger of Changtou & Owners’ Equity (Same Control)
Acquisition Date of merger of subsidiaries Preparation of consolidated financial statements
1. Preparation of merger date: consolidated balance sheet, consolidated income statement, consolidated cash flow statement
2. There is only one task on the merger day: offset equity
eg: The parent company holds 80% of the subsidiary
Borrow: Equity (paid-in capital)
capital reserve
Other comprehensive income
Surplus reserve
undistributed profit
Subsidiaries All Owners’ Equity
Loan: Long-term equity investment
80% held by the parent company
minority interests
20% held by other parties
Restore the retained earnings and other comprehensive income (the part attributable to the merging party) realized before the business merger (from the purchase from outside the group to the current merger), and transfer them from the merging party's capital reserve (capital premium or equity premium) to retained earnings ,Other comprehensive income
Borrow: capital reserve (offset against the parent company's equity premium or capital premium). (If the capital reserve balance is not enough, you can use as much as you have)
Credit: Surplus reserves (subsidiaries offset 80% of equity)
Undistributed profits (80% of equity in subsidiaries)
Note: ① The number of entries prepared every year is the same, and the retained earnings realized after the merger do not need to be restored (reason: the income and expenses realized every year after the merger are reflected in the consolidated income statement). ② Subsidiaries are purchased from outside the group, and undistributed profits are calculated and determined using adjusted net profits.
Direct investment & common control, acquisition of subsidiaries, preparation of consolidated financial statements after the merger date
1. Cost method→Equity method (3 supplements and 1 adjustment)
① Subsidiary realizes net profit or net loss
Year 1
Borrow: Long-term equity investment (net profit × 80%, no detailed accounts for statement items)
Credit: Investment income
Year 2
1st year
Borrow: long-term equity investment (or reverse entry)
Credit: Undistributed profits at the beginning of the year
2nd year
Borrow: long-term equity investment (or reverse entry)
Credit: Investment income
② Changes in other comprehensive income of subsidiaries
Year 1
Borrow: Long-term equity investment (net profit × 80%)
Credit: Other comprehensive income
Year 2
1st year
Borrow: long-term equity investment (or reverse entry)
Credit: Other comprehensive income
2nd year
Borrow: long-term equity investment (or reverse entry)
Credit: Other comprehensive income
③ Changes in other owners’ equity of subsidiaries
Year 1
Borrow: Long-term equity investment (net profit × 80%)
Credit: Capital reserve (statement items have no detailed accounts)
Year 2
1st year
Borrow: long-term equity investment (or reverse entry)
Credit: Capital Reserve
2nd year
Borrow: long-term equity investment (or reverse entry)
Credit: Capital Reserve
④ Subsidiary declares cash dividend
Year 1
Borrow: Investment income (cost method converted to equity method)
Loan: Long-term equity investment
Year 2
1st year
Borrow: Undistributed profits at the beginning of the year
Loan: Long-term equity investment
2nd year
Borrow: investment income
Loan: Long-term equity investment
2. Calculate long-term investment after adjustment by equity method
= long throw on merge day ± 3 make up and 1 move
3. Offset rights
If the current losses shared by the minority shareholders of a subsidiary exceed the minority shareholders’ share of the subsidiary’s owner’s equity at the beginning of the period (that is, excess losses occur), the balance will still offset the minority shareholders’ equity, that is, the minority shareholders’ equity may be a negative number.
end of year 2
Borrow: Equity (paid-in capital)
capital reserve
Other comprehensive income
Surplus reserve
Undistributed profits (when there is excess loss during the year)
Subsidiary Owners' Equity at the End of Year 2
Loan: Long-term equity investment
80% held by the parent company
minority interests
Other parties 20%, minority shareholders’ equity can be negative
4. Set off profit and loss
The investment income and profit distribution of the subsidiaries for the year are offset, and the consolidated financial statements only reflect the changes in the parent company’s shareholders’ equity.
Undistributed profit at the beginning of the year Net profit for the year = Undistributed profit at the end of the year Decrease during the year (withdrawal of surplus reserve + dividend distribution)
The numbers in the formula are all subsidiaries
Borrow: Investment income (net profit × 80%)
Profit and loss of minority shareholders (net profit × 20%)
Offset Subsidiary Net Profit
Undistributed profit
Subsidiaries Beginning balance
Undistributed profit at the beginning of the year Net profit for the year
Credit: Withdrawal from surplus reserve
Amount withdrawn by subsidiaries this year
Assignment to owner
Distribution number of subsidiaries this year (all)
Distributed profits at the end of the year
Undistributed profit at the end of the year decreased during the year (withdrawal of surplus reserve + dividend distribution)
5. At the same time, the portion of retained earnings realized before the merger that is attributable to the merging party is restored every year:
Borrow: capital reserve
Goods: surplus reserve
undistributed profit
6. If the dividends distributed by the subsidiary are not received
Debit: Other payables - dividends payable
Goods: other receivables - dividends receivable
Note 1: When a subsidiary issues cumulative preferred shares, regardless of whether dividends are declared for the current period, when calculating and presenting the "net profit attributable to shareholders of the parent company" in the consolidated income statement of the parent company, the net profit attributable to shareholders other than the parent company for the current period should be deducted. Holders of other equity instruments can accumulate dividends and the deduction amount is listed in the "Profits and losses of minority shareholders" item.
Note 2: When a subsidiary issues non-cumulative preference shares, when calculating and presenting the "net profit attributable to shareholders of the parent company" in the parent company's consolidated income statement, the amount of equity instruments held by other equity instruments other than the parent company announced for distribution in the current period is deducted. Dividends distributed to shareholders cannot be accumulated, and the deduction amount is listed in the "Profits and losses of minority shareholders" item.
Merger of Changtou & Owner’s Equity (not jointly controlled)
Purchase date
Merger Date Preparation: Consolidated Balance Sheet (V.S. Same Control Compilation 3 Sheet)
Purchase date (2 jobs)
1.Adjustment Assessment Value Increase/Depreciation
Assess value added
①
Debit: fixed assets/inventories/intangible assets, etc. (value-added part)
Credit: Capital Reserve
②
Borrow: capital reserve
Credit: Deferred income tax liability (25%)
Assessing impairment
①
Borrow: capital reserve
Credit: fixed assets/inventories/accounts receivable/intangible assets, etc.
②
Debit: Deferred income tax assets
Credit: Capital Reserve
2. Offset equity (note: capital reserves cannot be used directly)
Borrow: Equity (paid-in capital)
Capital reserve (adjusted amount)
Other comprehensive income
Surplus reserve
Undistributed profits (adjusted amount)
Subsidiary SE + Appraisal appreciation - Appraisal impairment (identifiable net assets on the date of purchase are fair) Note: Here the appraisal appreciation and impairment are considered to be deferred = Appreciation, impairment × (1-25%)
Goodwill (loan)
Loan: Long-term equity investment
Merger cost (purchase price, cost method, including goodwill), goodwill = merger cost - purchase date identifiable net assets fair
Minority shareholders’ equity (total owners’ equity × 20%)
Surplus reserves, undistributed profits (loan difference, negative goodwill)
The consolidated income statement is not compiled on the purchase date and cannot be included in the non-operating income of the income statement items.
Buy later (8 steps)
1. Adjustment and assessment of appreciation/depreciation
End of the year of purchase
Assess value added
①
Debit: fixed assets/inventories/intangible assets, etc. (value-added part)
Credit: Capital Reserve
②
Borrow: capital reserve
Credit: Deferred income tax liability (25%)
Assessing impairment
①
Borrow: capital reserve
Credit: fixed assets/inventories/accounts receivable/intangible assets, etc.
②
Debit: Deferred income tax assets
Credit: Capital Reserve
end of year 2
Assess value added
①
Debit: fixed assets/inventories/intangible assets, etc./undistributed profits at the beginning of the year (inventories sold in the first year)
Credit: Capital Reserve
②
Borrow: capital reserve
Credit: Deferred income tax liability (25%)
Assessing impairment
①
Borrow: capital reserve
Credit: fixed assets/inventories/accounts receivable/intangible assets, etc.
②
Debit: Deferred income tax assets
Credit: Capital Reserve
2. Assessment of appreciation/depreciation. Subsequent changes
Appraisal value increase at the end of the year of purchase
Additional depreciation and amortization should be provided
①
Borrow: administrative expenses
Credit: Fixed assets - accumulated depreciation/. Intangible assets – accumulated amortization
②
Debit: Deferred income tax liabilities
Credit: Income tax expense (25%)
Inventory sold
①
Borrow: operating costs (value-added and sold portion)
Credit: Inventory
②
Debit: Deferred income tax liabilities
Credit: Income tax expense (25%)
end of year 2
Assessment value added in year 1
Additional depreciation and amortization should be provided
①
Borrow: Undistributed profits at the beginning of the year
Credit: Fixed assets - accumulated depreciation/. Intangible assets – accumulated amortization
②
Debit: Deferred income tax liabilities
Credit: Undistributed profits at the beginning of the year
Inventory sold
①
Borrow: Undistributed profits at the beginning of the year
Credit: Undistributed profits at the beginning of the year (inventories sold in the first year)
Don't write this entry
②
Debit: Deferred income tax liabilities
Credit: Undistributed profits at the beginning of the year
2nd year of current year
Additional depreciation and amortization should be provided
①
Borrow: administrative expenses
Credit: Fixed assets - accumulated depreciation/. Intangible assets – accumulated amortization
②
Debit: Deferred income tax liabilities
Credit: Income tax expense (25%)
Inventory sold
①
Borrow: operating costs (value-added and sold portion)
Credit: Inventory
②
Debit: Deferred income tax liabilities
Credit: Income tax expense (25%)
Assessing impairment (accounts receivable)
Prerequisites for the following entries: accounts receivable have been collected and bad debt provisions have been written off
The parent company recognizes fair value of 80, the subsidiary's book value is 100, and the credit impairment loss of 20 when the subsidiary is recovered has been recognized by the parent company and needs to be written off.
Take back 80
①
Debit: Accounts receivable 20
Credit: Credit impairment loss 20
Take back 100
①
Debit: Accounts receivable 20
Credit: Credit impairment loss 20
The final presentation of the consolidated statements is: Debit: bank deposit 80 (acknowledged fairness). Credit: Accounts receivable 80
Deferred in the year of recovery
Debit: income tax expense (recovered portion)
Credit: Deferred income tax assets
2nd year after repossession
Purchase date Impairment assessment
Borrow: capital reserve
Credit: Undistributed profits at the beginning of the year (accounts receivable have been collected (things are not there → Undistributed profits at the beginning of the year))
Debit: Deferred income tax assets
Credit: Capital Reserve
Take back 80 or 100
①
Debit: Undistributed profits at the beginning of the year (accounts receivable are gone)
Credit: Undistributed profits at the beginning of the year (profit and loss accounts will be replaced in the second year)
Deferred in the year of recovery
Borrow: Undistributed profits at the beginning of the year (profit and loss accounts will be replaced in the second year)
Credit: Deferred income tax assets
3. Adjusted net profit
Consider assessing value added or depreciated subsequent changes
= Subsidiary net book profit - supplementary depreciation + offset income tax expense, etc.
4. Adjusted undistributed profits = Undistributed profits at the beginning of the year + Adjusted net profits – Withdrawal of surplus reserves – Dividends
Note: Surplus reserves & dividends → Subsidiary book number for this period (no need to adjust)
Note: Starting from the second year, undistributed profits at the beginning of the year are adjusted
5. Cost method → Equity method (3 supplements and 1 adjustment)
that year
Net profit realized for the year (after adjustment)
Borrow: Long-term equity investment (adjusted net profit × 80%)
Credit: Investment income
Dividends for the year
Borrow: investment income
Loan: Long-term equity investment (dividends from subsidiaries × 80%)
Year 2 repeats parts of Year 1
Previous realized net profit (adjusted)
Borrow: Long-term equity investment (adjusted net profit × 80%)
Credit: Undistributed profits at the beginning of the year
Previous dividends
Borrow: Undistributed profits at the beginning of the year
Loan: Long-term equity investment (dividends from subsidiaries × 80%)
6. After adjustment, long-term investment = cost method long-term investment ± 3 to make up for 1 adjustment
7. Offset equity (note: capital reserves cannot be used directly)
Borrow: Equity (paid-in capital)
Capital reserve (adjusted amount)
Other comprehensive income
Surplus reserve
Undistributed profits (adjusted amount)
Subsidiary Adjusted SE (= fair value of identifiable net assets calculated on an ongoing basis from the date of acquisition)
Goodwill (debit, constant from year to year)
Loan: long-term equity investment (adjusted long-term investment, 3 supplements and 1 adjustment)
Minority shareholders’ equity (debit Total owners’ equity × 20%)
Surplus reserves, undistributed profits (calculated on the date of purchase), non-operating income (excluding the part on the date of purchase)
Note: Minority shareholders’ equity = minority shareholders’ equity in the previous year (or purchase date) + (SE change this year × 20%)
Changes in SE this year = Adjusted net profit this year – Dividends this year (no deduction for surplus reserve)
8. Set off profit and loss
Undistributed profit at the beginning of the year Net profit for the year = Undistributed profit at the end of the year Decrease during the year (withdrawal of surplus reserve + dividend distribution)
The numbers in the formula are all subsidiaries
Borrow: Investment income (adjusted net profit × 80%)
Profit and loss of minority shareholders (adjusted net profit × 20%)
Offset Subsidiary Net Profit
Undistributed profit
Subsidiaries Beginning balance
Undistributed profit at the beginning of the year Net profit for the year
Credit: Withdrawal from surplus reserve
Amount withdrawn by subsidiaries this year (no adjustment required)
Assignment to owner
Distribution amount of subsidiaries this year (all) (no adjustment required)
Undistributed profits at the end of the year (adjusted undistributed profits)
Undistributed profits at the end of the year decreased during the year
Note: Dividends receivable & dividends payable offset
Debit: Other payables - dividends payable (dividends × 80%)
Credit: Other receivables—dividends receivable
Lecture 142 Comprehensive Questions
Consolidation of internal commodity transactions
Offset processing of internal sales revenue & costs
Internal purchases Current period When all sales are realized
Borrow: operating income (offset by internal sales price)
Credit: Operating costs
Internal purchase Current period When sales are not realized
① Pretend to sell everything
Debit: operating income (full offset of internal sales price)
Credit: Operating costs
②Unimplemented part
Borrow: operating costs (added price × unsold %, flushed back)
Credit: Inventory (offsetting unsold portion and markup)
Internal purchases as fixed assets
Debit: operating income (internal sales price fully offset)
Credit: Operating costs (operating costs of internal sales are not recognized)
Fixed assets (the added price is not recognized)
Internal commodity purchase and sale transactions offset land value-added tax & value-added tax
1. Transfer real estate and pay land value-added tax
individual reports
Debit: taxes and surcharges
Credit: Taxes payable - Land value-added tax payable
Consolidated Statement
① Unrealized gains and losses from internal transactions have been offset and no added value has been realized, so the gains from this transfer transaction are not reflected in the consolidated income statement;
② No profit or loss for the current period is recognized, and it is treated as an asset in the consolidated balance sheet;
③When sold to a third party, the value-added gain is realized in the consolidated income statement and transferred to the current profit and loss.
Borrow: ×× assets (eg: other current assets)
Credit: taxes and surcharges
Year of sale to third party:
Borrow: ×× assets (eg: other current assets)
Credit: Undistributed profits at the beginning of the year
Debit: taxes and surcharges
Credit: ×× assets (eg: other current assets)
2. Unilateral provision of value-added tax (seller: exempt from value-added tax, purchaser: deductible)
Consolidated Financial Statements
① Input tax deduction should not be offset and should be reflected as an asset at the level of consolidated financial statements.
② Before being sold to a third party, the difference arising from the value-added tax input tax can be recognized as deferred income in the consolidated financial statements, and will be transferred to the current profit and loss when sold to a third party.
Consolidation of internal sales products when preparing consolidated financial statements continuously
Year 1
1. Offset internal revenue and costs
Borrow: operating income
Credit: Operating costs
Inventory (offsetting unsold portion markup)
2. Recognize the deferral caused by offsetting inventory
Debit: Deferred income tax assets (inventory × purchaser’s tax rate %)
Credit: Income tax expense
Year 2
Copy Year 1
1. Offset internal revenue and costs
Borrow: Undistributed profits at the beginning of the year
Credit: Operating costs (regardless of whether they are sold or not, all inventories are transferred to operating costs)
2. Recognize the deferral caused by offsetting inventory
Debit: Deferred income tax assets (inventory × purchaser’s tax rate %)
Credit: Undistributed profits at the beginning of the year
Year 2
1. Restore unsold parts to inventory
Borrow: operating costs
Credit: Inventory
2. Recognize the deferral caused by offsetting inventory
Debit: income tax expense
Credit: Deferred income tax assets (inventory × purchaser’s tax rate %)
Consolidation of inventory depreciation provisions
Offset Consolidated Statements Not Recognized Part
Debit: Inventory (replacing account: provision for inventory decline)
Credit: Asset impairment loss
Continuous preparation of consolidated statements
Year 1
1. Offset internal revenue and costs
Borrow: operating income
Credit: Operating costs
Inventory (offsetting unsold portion markup)
2. Offset provision for inventory decline
Borrow: inventory
Credit: Asset impairment loss
3. Recognize the deferral caused by offsetting inventory
Debit: Deferred income tax assets (inventory × purchaser’s tax rate %)
Credit: Income tax expense
Year 2
Copy Year 1
1. Offset internal revenue and costs
Borrow: Undistributed profits at the beginning of the year
Credit: Operating costs (regardless of whether they are sold or not, all inventories are transferred to operating costs)
2. Offset provision for inventory decline
Borrow: inventory
Credit: Undistributed profits at the beginning of the year
3. Recognize the deferral caused by offsetting inventory
Debit: Deferred income tax assets (inventory × purchaser’s tax rate %)
Credit: Undistributed profits at the beginning of the year
Year 2
1. Restore unsold parts to inventory
Borrow: operating costs
Credit: Inventory
2. Offsetting provision for inventory decline (three steps)
① Arrival at the beginning of the period
Debit: Inventory (Amount in Year 1)
Credit: Asset impairment loss
② offset sales
Borrow: operating costs
The buyer's individual report carries forward costs: borrow: main business costs. Inventory impairment . Credit: Inventory goods Decompose the above entries: Debit: Main business costs. Credit: Inventory goods. Debit: Provision for inventory depreciation (consolidated statements do not recognize provision for inventory depreciation, so carry-forward is not recognized). Credit: Main business costs
Credit: Inventory (sales part this year, reversed, individual report carried forward, provision for decline in price)
③ offset the difference
Borrow: Inventory (individual table: [should be at the end of the period ③ - (beginning of the period ① - current sales ②)] compared with the unrecognized amount in the consolidated statement, make up the difference)
Credit: Asset impairment loss
3. Confirm deferral
Consolidation of internal claims and debts
Offset of internal claims and debts
include:
1. Accounts receivable ↔ Accounts payable
2. Notes receivable ↔ Notes payable
3. Advance payments ↔ Advances from receipts (contract liabilities)
4. Debt investments, other debt investments ↔ Bonds payable
5. Other receivables (including dividends receivable and interest receivable) ↔ Other payables (including dividends payable and interest payable)
Borrow: Debt type (original value, price including tax)
Loan: Debt type
Purchased from a third party (there is a difference)
Debit: Bonds payable (amortized cost of individual statements)
Investment income (debit)
Credit: debt investment, etc. (amortized cost in individual statements)
Financial expenses (loan difference)
Consolidation of internal accounts receivable and payables & bad debt provisions
Year 1
1. Offset current year receivables and payables
Debit: Accounts payable (book balance, original value, price including tax)
Credit: Accounts receivable
2. Offset bad debt provisions for the current year
Debit: Accounts receivable - provision for bad debts (consolidated statements do not recognize provision for bad debts)
Notes receivable - provision for bad debts
Credit: Credit impairment loss
3. Deferred income tax assets originally recognized in individual reports shall be reversed.
Debit: income tax expense
Credit: Deferred income tax assets
Year 2
1. Offset current year receivables and payables
Debit: Accounts payable (only offset the closing balance of the current period)
Credit: Accounts receivable
2. Offset bad debt provisions
1st year
Debit: Accounts receivable - provision for bad debts
Credit: Undistributed profits at the beginning of the year
2nd year
Debit: Accounts receivable - provision for bad debts
Credit: Credit impairment loss (or reverse entry to offset the difference between the current year's joint and individual reports)
3. Deferral
1st year
Borrow: Undistributed profits at the beginning of the year
Credit: Deferred income tax assets
2nd year
Debit: income tax expense (reversal or offset)
Credit: Deferred income tax assets
Consolidation of internal fixed asset transactions
Continuous preparation of consolidated statements
fixed assets → fixed assets
Borrow: Income from asset disposal (disposal of fixed assets, the amount of profit and loss from asset disposal is included in the individual table)
Credit: Fixed assets - original price
Products → Fixed assets
Borrow: operating income
Credit: Operating costs
Fixed assets – original price (offset of unrealized gains)
Year 1
1. Offset gains and losses from internal transactions
Borrow: Proceeds from asset disposal
Credit: Fixed assets - original price
or
Borrow: operating income
Credit: Operating costs
Fixed Assets
2. Offset excess depreciation provision for the current year
Borrow: Fixed assets - accumulated depreciation (inflated original price ÷ depreciation life)
Credit: Management expenses, etc.
3. Confirm deferral
Debit: Deferred income tax assets (fixed capital difference × tax rate %)
Credit: Income tax expense
Year 2
Copy Year 1
1. Offset gains and losses from internal transactions
Borrow: Undistributed profits at the beginning of the year
Credit: Fixed assets - original price
2. Offset depreciation
Borrow: Fixed assets - accumulated depreciation (inflated original price ÷ depreciation life)
Credit: Undistributed profits at the beginning of the year
3. Confirm deferral
Debit: Deferred income tax assets (fixed capital difference × tax rate %)
Credit: Undistributed profits at the beginning of the year
Year 2
1. Offset excess depreciation in the current year
Borrow: Fixed assets - accumulated depreciation (inflated original price ÷ depreciation life)
Credit: Management expenses, etc.
2. Reversal and deferral
Debit: Income tax expense (how much depreciation will be offset this year and how much will be reversed and deferred)
Credit: Deferred income tax assets
Consolidation processing during cleanup
three conditions:
1. Clean up after expiration
2. Overdue cleaning
3. Clean up in advance
Note: In which year to clean up, in which year all fixed asset-related items will be replaced with "non-operating income" or "non-operating expenses" or "asset disposal income"
1. Clean up after expiration
Copy previous year
1. Offset gains and losses from internal transactions
Borrow: Undistributed profits at the beginning of the year
Credit: Proceeds from asset disposal
2. Offset excess depreciation in previous years
Debit: Proceeds from asset disposal (instead of fixed assets - accumulated depreciation)
Credit: Undistributed profits at the beginning of the year
3. Offset excess depreciation provision in the current year
Debit: Proceeds from asset disposal (instead of fixed assets - accumulated depreciation)
Credit: Management expenses, etc.
2. Overdue cleaning
Still in use until the depreciation period (copied from previous years)
1. Offset gains and losses from internal transactions
Borrow: Undistributed profits at the beginning of the year
Credit: Fixed assets - original value
2. Offset excess depreciation in previous years
Debit: fixed assets - accumulated depreciation
Credit: Undistributed profits at the beginning of the year
Note: After the useful life expires, no new depreciation will be generated.
3. Clean up in advance
Copy previous year
1. Offset gains and losses from internal transactions
Borrow: Undistributed profits at the beginning of the year
Credit: Proceeds from asset disposal
2. Offset excess depreciation in previous years
Debit: Proceeds from asset disposal (instead of fixed assets - accumulated depreciation)
Credit: Undistributed profits at the beginning of the year
3. Offset excess depreciation provision in the current year
Debit: Proceeds from asset disposal (instead of fixed assets - accumulated depreciation)
Credit: Management expenses, etc.
Consolidation of internal intangible asset transactions
Treatment method: similar to fixed assets
special deal
Goodwill (not jointly controlled)
Purchase date:
Equity method 30% → Cost method 70%
table → not considered cross-border
Long-term investment = 30% book value + 40% fairness
Equity method (other comprehensive income, other capital reserves) has not been carried forward
Combined table → only recognize fair value
→ 30% book fair adjustment
→ Carry forward other comprehensive income, other capital reserves
At the time of death control: (70% is deemed to be sold)
Cost method 70% → Equity method 30% or financial assets 5%
30% or 5% → Fair remeasurement based on death control date
The combined table only recognizes the investment income calculated when the loss of control occurs.
Cost method 70% → financial assets 10%
Investment income (at the time of loss of control) = (acquisition consideration 60%, fair value of remaining equity 10%) - fair value of identifiable net assets calculated continuously since the purchase date × 70% - goodwill ± other comprehensive income/capital reserve
If there are other comprehensive income (convertible portion of profit and loss) and other capital reserves that have not been carried forward, they need to be carried forward. Investment income includes the carry-forward amount.
Cost method 70% → Equity method 30%
30% → Retrospective adjustment
Investment income (at the time of loss) = (40% consideration 30% fair value) - fair value of identifiable net assets calculated continuously from the date of purchase × 70% - goodwill ± other comprehensive income/capital reserve
Note: 70% of the equity is sold, and only 5% is sold. The investment income confirmed in the individual table is not recognized in the combined table.
Purchase of minority shareholders' equity in subsidiaries
After buying 70%, buy another 1%
1% & the fair difference of identifiable net assets calculated continuously on the date of purchase → included in capital reserve
Dispose of subsidiary equity without losing control
After buying 70%, sell 1%
1% of the price received & the fair difference of identifiable net assets is continuously calculated on the purchase date → included in the capital reserve
Constituting a package deal (intending to sell to Fengkang) → the difference → included in other comprehensive income
additional investment
Non-controlling
Purchase of minority shareholders' equity in subsidiaries
After buying 70%, buy another 1%
1% & the fair difference of identifiable net assets calculated continuously on the date of purchase → included in capital reserve
table
Borrow: Long-term equity investment (payment of consideration + relevant taxes and fees) 1%
Credit: related payment assets (book)
Profit and loss from asset disposal (asset book & fair balance)
Bank deposit (to pay relevant taxes and fees)
Combined table
offset rights
Borrow: Equity (paid-in capital)
Capital reserve (adjusted amount)
Other comprehensive income
Surplus reserve
Undistributed profits (adjusted amount)
Subsidiary SE + Appraisal appreciation - Appraisal impairment (identifiable net assets on the date of purchase are fair) Note: Here the appraisal appreciation and impairment are considered to be deferred = Appreciation, impairment × (1-25%)
Goodwill (unchanged)
Capital reserve (purchase 1%, payment of consideration & fair difference between identifiable net assets continuously calculated on the date of purchase)
Credit: Long-term equity investment (adjusted amount = first investment (personal statement book) Second investment (personal statement book) ± 3 plus 1 adjustment)
Minority shareholders’ equity (total owners’ equity × 20%)
Additional investment to achieve control (multiple transactions, step-by-step merger: does not constitute a "package deal")
10%→70%
All long-term investments are recorded fairly, and there is no need to reconcile the long-term investments in the consolidated statement (individual table: 10% of cross-border sales are sold first and then bought, and 60% of the consideration paid is recorded)
Purchase date equity
Borrow: Equity (paid-in capital)
Capital reserve (adjusted amount)
Other comprehensive income
Surplus reserve
undistributed profit
Subsidiary SE + Appraisal appreciation - Appraisal impairment (identifiable net assets on the date of purchase are fair) Note: Here the appraisal appreciation and impairment are considered to be deferred = Appreciation, impairment × (1-25%)
Goodwill (unchanged)
Credit: Long-term equity investment (first investment (fair) second investment (fair))
Minority shareholders’ equity (total owners’ equity × 20%)
30%→70%
Individual table: 30% bookkeeping, 40% fair bookkeeping
Combined table
Purchase day, adjust long investment
Borrow: Long-term equity investment (fair value on the date of purchase)
Credit: Long-term equity investment (book value on purchase date)
Investment income (borrow or loan)
Other comprehensive income and other capital reserves captured from the table
Borrow: other comprehensive income, other capital reserves
Credit: Investment income
Purchase date equity
Borrow: Equity (paid-in capital)
Capital reserve (adjusted amount)
Other comprehensive income
Surplus reserve
undistributed profit
Goodwill (unchanged)
Credit: Long-term equity investment (first investment (adjusted fair value) second investment (fair value))
Minority shareholders’ equity (total owners’ equity × 20%)
Same control
Multiple transactions, achieving the same control step by step (not considered a “package transaction”)
Book value of Changjian Investment → Same control is the share of the combined party’s net assets in the book value of the final controlling party’s consolidated financial statements × shareholding %
150 lectures, not learned yet (probability of passing the exam is low)
Disposal of subsidiary investments
Don't lose control
70% → 60%
Table:
Borrow: bank deposit (10% of consideration received)
Loan: long-term equity investment (book × 10%/70%)
Investment income (difference, 10% of the consideration received - book value × 10%/70%)
Combined table: Individual tables are not recognized Investment income
Debit: Investment income (10% of the consideration received - fair identifiable net assets calculated continuously on the date of purchase × 10%)
Credit: Capital Reserve
Note: As long as there is no loss of control, the combined statement will not recognize the investment income generated from the sale of individual statements.
bereavement control
70%→30% retroactive adjustment (active disposal)
table
1. 40% of the sale portion
Debit: bank deposit (received consideration)
Provision for impairment of long-term equity investments
Loan: Long-term equity investment
Investment income (borrow or loan)
2. The remaining 30% is retrospectively adjusted: cost method → equity method
①Original investment time point: (Fair value of identifiable net assets > initial investment cost)
Borrow: Long-term equity investment - investment cost
Credit: Profit distribution - retained profits
Surplus reserve
② Changes in net assets from the original investment time to the date of disposal (excluding dividends paid or declared)
Original investment time point to the end of the year before disposal
Borrow: Long-term equity investment - profit and loss adjustment
Credit: Profit distribution - retained profits
Surplus reserve
Disposal year
Borrow: Long-term equity investment - profit and loss adjustment
Credit: Investment income
③Other changes:
Borrow: Long-term equity investment - other comprehensive income
——Other changes in equity
Credit: Other comprehensive income
Capital reserves - other capital reserves
Combined table
It is deemed that 70% are sold and 30% are bought → Confirm investment income, carry forward other comprehensive income, other capital reserves
Investment income = disposal consideration of 40% + remaining 30% equity - (calculated based on the original shareholding ratio and calculated continuously from the date of purchase, net assets share + goodwill)
If a statement has other comprehensive income and other capital reserves, they must also be carried forward to investment income (the combined statement recognizes fair value and does not recognize the book value of the equity method)
1. The remaining 30%, after the individual statement is adjusted, the book value → the combined statement is adjusted to be fair
Borrow: Long-term equity investment (fair)
Loan: Long-term equity investment (individual table)
Investment income (borrow or loan)
2. 3 supplements and 1 adjustment (30% of the tables have been adjusted, 40% are being adjusted in the combined table)
①Original investment time point: (Fair value of identifiable net assets > initial investment cost)
Borrow: Investment income (sold, replacing "long-term equity investment - investment cost")
Credit: Undistributed profits (replaces "profit distribution - undistributed profits")
Surplus reserve
② Changes in net assets from the original investment time to the date of disposal (excluding dividends paid or declared)
Original investment time point to the end of the year before disposal
Borrow: investment income (replacing "long-term equity investment - profit and loss adjustment")
Credit: Undistributed profits
Surplus reserve
Disposal year
Borrow: Investment income (replacing "long-term equity investment - profit and loss adjustment")
Credit: Investment income
③Other changes:
Borrow: investment income (replacing "long-term equity investment - other comprehensive income or other changes in equity")
Credit: Other comprehensive income
Capital reserves - other capital reserves
3. Carry forward other comprehensive income and other capital reserves
Borrow: other comprehensive income
Credit: Investment income
70%→30% retroactive adjustment (passive dilution)
table
1. Other parties increase capital by 1,000
Borrow: Long-term equity investment (the portion of the capital increase that should be distributed (1000×30%) - the part diluted by 40% of the cost method of Long-term Investment before the capital increase)
Credit: Investment income
2. The remaining 30% is retrospectively adjusted: cost method → equity method
①Original investment time point: (Fair value of identifiable net assets > initial investment cost)
Borrow: Long-term equity investment - investment cost
Credit: Profit distribution - retained profits
Surplus reserve
② Changes in net assets from the original investment time to the date of disposal (excluding dividends paid or declared)
Original investment time point to the end of the year before disposal
Borrow: Long-term equity investment - profit and loss adjustment
Credit: Profit distribution - retained profits
Surplus reserve
Disposal year
Borrow: Long-term equity investment - profit and loss adjustment
Credit: Investment income
③Other changes:
Borrow: Long-term equity investment - other comprehensive income
——Other changes in equity
Credit: Other comprehensive income
Capital reserves - other capital reserves
Combined table
1. The remaining 30%, book → fair
Borrow: Long-term equity investment (fair)
Loan: Long-term equity investment (individual table)
Investment income (borrow or loan)
2. 3 supplements and 1 adjustment (40%)
①Original investment time point: (Fair value of identifiable net assets > initial investment cost)
Borrow: Investment income (sold, replacing "long-term equity investment - investment cost")
Credit: Undistributed profits (replaces "profit distribution - undistributed profits")
Surplus reserve
② Changes in net assets from the original investment time to the date of disposal (excluding dividends paid or declared)
Original investment time point to the end of the year before disposal
Borrow: investment income (replacing "long-term equity investment - profit and loss adjustment")
Credit: Undistributed profits
Surplus reserve
Disposal year
Borrow: Investment income (replacing "long-term equity investment - profit and loss adjustment")
Credit: Investment income
③Other changes:
Borrow: investment income (replacing "long-term equity investment - other comprehensive income or other changes in equity")
Credit: Other comprehensive income
Capital reserves - other capital reserves
3. Carry forward other comprehensive income and other capital reserves
Borrow: other comprehensive income
Credit: Investment income
Investment income = Disposal of 40% of the consideration 0 + The remaining 30% is fair - (calculated based on the original shareholding ratio of 70%, calculated continuously from the date of purchase, net assets share + goodwill)
If a statement has other comprehensive income and other capital reserves, they must also be carried forward to investment income (the combined statement recognizes fair value and does not recognize the book value of the equity method)
70%→10%
Table:
Borrow: bank deposit (60% of consideration received)
Trading financial assets (fair)
Loan: long-term equity investment (book × 10%/70%)
Investment income (difference)
Combined table:
Investment income = Disposal of 40% of the consideration 0 + The remaining 30% is fair - (calculated based on the original shareholding ratio of 70%, calculated continuously from the date of purchase, net assets share + goodwill)
If a statement has other comprehensive income and other capital reserves, they must also be carried forward to investment income (the combined statement recognizes fair value and does not recognize the book value of the equity method)
3 supplements and 1 adjustment (100%)
Carry forward other comprehensive income, other capital reserves
70%→60%
Combined table
Before the capital increase, the equity ratio is 70% × The share of the book net assets before the capital increase - After the capital increase, the shareholding ratio is 60% × The share of the book net assets after the capital increase, the difference is included in the capital reserve, if it is not enough to offset, the retained earnings are adjusted.
cross holdings
Parent company→80%→Subsidiary Subsidiary→3%→Parent company
80%
Normal processing (the equity is offset against the equity)
3%
"destroy"
Debit: treasury stock (offset each period: the amount is the cost when acquired)
Loan: Long-term equity investment/trading financial assets
Profit distribution and cash dividends obtained → offset
Borrow: investment income
Credit: Distribution to owners (or shareholders)
Change in fair value → Offset
Borrow: Other comprehensive income/gains and losses from changes in fair value
Credit: Other equity instrument investments/trading financial assets
countercurrent trading
Since the unrealized portion of internal transactions is fully offset in the consolidated statement, the unrealized portion of counter-current transactions is in the subsidiary, so it needs to be restored to the portion attributable to minority shareholders.
Debit: minority shareholders’ equity ((profit and loss from unsold portion – income tax expense) × 20%)
Credit: Profit and loss of minority shareholders
Year 2
Repeat Year 1
Debit: minority shareholders’ equity ((profit and loss from unsold portion – income tax expense) × 20%)
Credit: Undistributed profits at the beginning of the year
Sold part → reverse entry
Borrow: Profit and loss of minority shareholders
Credit: Minority interests
Other special deals
Preparation of consolidated cash flow statement
slightly