Corporate Accounting: Consolidated Financial Statements and Acquisition Analysis

This article discusses the process of growing corporations through acquisition, with a focus on consolidated financial statements and acquisition analysis. It covers the accounting standards and procedures for presenting consolidated financial statements, as well as the impact of acquisitions on financial statements.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Introduction......................................................................................................................................2
Question 1:.......................................................................................................................................3
Question 2:.......................................................................................................................................4
Question 3:.......................................................................................................................................7
Conclusion.......................................................................................................................................8
References:......................................................................................................................................9

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Introduction
The process of growing corporations in terms of gaining control of the other company in terms of
cost reduction, material supplies or controlling the market or diversification of the product or
further to avail the tax benefits (Hoyle, Schaefer and Doupnik 2015).In this case, acquisition is
been done by Tuna Limited for Brim Limited. The financial positions and the results of
operations are presented through consolidated financial statements in which it is shown as a
single enterprise. In this regard, single financial information is to be provided about the parent
and subsidiary company (Erel, Jang and Weisbach 2015).
On the other hand, as per Section 129 (Clause 3), Companies Act 2013, the Consolidated
Financial Statements needs to be made in the same manner for subsidiaries as it is made for the
parent companies (Yang, Poon and Lee 2015). Further, as per the accounting standards (AS 21)
certain procedures as well as principles are given for the presentation of the consolidated
financial statements. Further for the acquisition of subsidiary represents the minority interest
rate, for Brim Limited for the amount that payable for the subsidiary shareholders at book value
beginning from the bargaining time of the acquisition. Nevertheless, IAS 27, “Consolidated
Financial Statements and Accounting for Investments in Subsidiaries” depicts the basic
framework for the preparation (Lee and Parker 2014).
As pr the report the Tuna Limited as the parent company is acquiring Brim Limited where
acquisition analysis, consolidation journal entries and the consolidation worksheet for the Tuna
Limited to address working of the company.

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Question 1:

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Question 2:

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Question 3:

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Conclusion
The consolidation has shown to be profitable in nature because for carrying out the
consolidation, the fair value is being re- evaluated. Moreover, the consolidation has been done
when the share capital Retained Earnings of Brim Limited has been eliminated and with shares n
Brim Limited in Tuna Limited. To merge, the two companies, the individual share capital needs
to be eliminated. Hence, the same can be seen in the profit conditions of the company. Firstly,
the profit for Tuna Limited was $9400 followed by the profit of Brim Limited as $8400. After,
consolidation, the profits has been merged onto $17,290 based on the workings done. However,
as depicted the consolidation will be beneficial in long run as the Tuna Limited has acquired
Brim Limited as subsidiary through acquisition.

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References:
Erel, I., Jang, Y. and Weisbach, M.S., 2015. Do acquisitions relieve target firms’ financial
constraints?. The Journal of Finance, 70(1), pp.289-328.
Hoyle, J.B., Schaefer, T. and Doupnik, T., 2015. Advanced accounting. McGraw Hill.
Lee, T.A. and Parker, R.H. eds., 2014. Evolution of Corporate Financial Reporting (RLE
Accounting). Routledge.
Yang, J.G., Poon, W.W. and Lee, J.Z.H., 2015. The Impact Of The New Consolidation
Accounting Standards On Financial Statements. Franklin Business & Law Journal, 2015(1).