Advanced Financial Accounting Reporting | Desklib

Advanced financial
accounting reporting

Contents
QUESTION 1.............................................................................................................................3
QUESTION 2.............................................................................................................................4
QUESTION 3.............................................................................................................................4
QUESTION 4.............................................................................................................................5
a. Explain NCI is better considered as equity or debt............................................................5
b. Explain why inter-group transactions must be eliminated.................................................6
QUESTION 5.............................................................................................................................6

QUESTION 1
Subsidiary features are the elements over which the parent company controls, such as
the ability to monitor monetary and work matters and derive benefits from their exercise. To
do this, parents need to have more than half the level of ownership in the holding
organization. Also, the parent company should be organized as a free business element to
obtain subsidiary companies
Employees are mentioned as a substance that parents can exert key influence but cannot
control. If the parent company acquires 20%-half ownership in the holding organization, the
parent company can choose the currency, function, and different options that affect the
employees.
Organizations can hold fluctuating levels of interest in different organizations by
acquiring equity. The shareholding section summarizes the powers and different freedoms an
organization has over a holding organization. There are two important structures that these
types of holding organizations can adopt, namely specific subsidiaries or associates. An
organization that is interested in another organization is called a "parent organization". An
important contrast between a subsidiary and a partner is that while an auxiliary is an
organization in which the parent is the larger investor, the parent is a firm minority among the
partners.
Basis Associate Subsidiary
Meaning The parent is a minority
shareholder in Associate
(significant influence).
The parent is a majority
shareholder in the
Subsidiary (control).
Ownership If the parent owns a share
between 20%-50%, an
Associate can be accounted
for.
Parent need to purchase a
share that exceeds 50% in
the Subsidiary.
Value technology is a bookkeeping strategy by which a business is first thought of as
cost. Due to changes in the share of financial backers in the investee's net resources after
acquisition. The gain or misfortune of the financial supporter includes its part in the gain or
misfortune of the investee and other parts of the financial supporter Full compensation
includes a portion of the investee's other broad compensation. A joint game plan is one in