logo

Corporate Accounting Sample Assigment (Solution)

   

Added on  2021-01-01

11 Pages3385 Words407 Views
Corporate Accounting

Table of ContentsMain report..................................................................................................................................1Additional report.........................................................................................................................4Group summary report................................................................................................................6REFERENCES................................................................................................................................8

Consolidation is a process of preparing business statements which includes combining ofassets, equity, liability and operating accounts of two or more firms working under a same parentorganisation. Consolidation can be done of two different organisations which are combined bythe way or merger, acquisition or take over. Preparing these statements has become common forcompanies which are performing under multiple entities. Primary aim of preparing thesestatements is to hide business collapse. Companies operating under a group structure can bebeneficial with business efficiency, tax advantages and various laws. Six business articles areanalysed in order to evaluate concept of consolidation.Main reportAccording to Dolar and Burak, consolidation in banking industry is likely to raise variousconsequences. Consolidation of large banking companies effects ability of small business ofobtaining funds. In any industry, there are few market players which affect the profitability andgrowth of other small business operating in same sector. As no market place is perfectcompetition market, few companies enjoys major market share due to which small firms has tosuffer. From this debate it is observed that the main reason behind business collapse of smallbusiness is merger or acquisition of large businesses. The concept of consolidation is beneficialas well as disadvantageous for various firms. It can be said that consolidation of large companiesresults in situation of consolidation of small companies. This article is focused to consolidationof banking companies which states that this process results in protecting business collapse oflarge companies but also results in collapse of small companies. This process results in cyclicaleconomic trend according to which it is expected that consolidation of one company will resultin situation of consolidation of other companies as they will also tend to gain benefit from thisprocess. This cyclic trend can be prevented with government intervention. Governmentalauthorities can control consolidation by various legislations and laws. From this article, various findings which are gained are due to consolidation of variouslarge companies, small businesses has to suffer as their profit making ability is decreased. Majormarket share is in the hands of few large companies when it comes to banking sector. Evidenceof these findings are given below:Scale of companiesGDPFortune 500 companies73.00%Other thousands companies27.00%1

From the above table, it can be analysed that that major profit, market share orcontribution towards GDP is because of few large companies whereas a minor percent ofcountry's GDP is contributed by numerous small companies this situation has raised because ofconsolidation of large companies. According to Aulich, Sansom and McKinlay (2014), consolidation is a process which hasbrought fresh look of municipal authorities. This article is focused on municipal consolidationsof Australia and New Zealand. Consolidation has various methods such as merger, acquisition,amalgamation, establishing a sister venture and many more. Every form of consolidation hasdifferent impact on the economy. This article is more concerned with impact on economy ratherthan on any business organisation. This research articulates the fact that local government adoptsmechanism to consolidate with each other. This collaboration provided an evidence thatamalgamation necessarily yields substantial economies of scale. The reason behind this processused by municipal corporation is to earn efficiency gains. This process provides variousopportunities to achieve economies of scale. Municipal organisations work for public due towhich it is hard to earn reasonable amount if profit due to which various corporations ofAustralia decided to consolidate with each other in order to restrict the scope of businesscollapse. There is a major issue in the case of consolidation of municipal corporations as theseare governmental authorities and they can be a danger to democracy. From this article, variousfindings are as follows. Municipal organisations of Australian governments are tend to useprocess of consolidation in order to acquire more funds and facilitate their society. Evidence forthis findings is mentioned below as an example:Australia currently has 560 local councils which shows the drastic fall in the localcouncils due to consolidation. These councils prepare their financial statements usingconsolidation in order to represent high earned profit. According to one of famous author named T.A. Lee, Robert H. Parker the moralobligation is that report and statements are presented periodically to shareholder that help inaction of investments. The general purpose of consolidation is presenting the legal annual reportthat contain information of firm's profitability and financial position of current accounting year.These statements are deliberate to inform the person those have restricted authority, ability orresources to obtain information. It expound the traditional position role of directors, formalinformation of management ability of using organisation resources and achieving company goal.2

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Impact of Mergers and Acquisitions on Hiding Imminent Business Failures
|12
|2821
|338

Mergers and Acquisitions | Managerial Economics Assignment
|15
|3569
|139

Mergers and Acquisitions: Strategies, Types, and Valuation
|13
|3793
|45

Financial Accounting: Consolidated Financial Statements and Financial Performance Analysis
|12
|3748
|457

Rationales and Methods of Acquisition: A Case Study of Bendigo Adelaide Bank and Adelaide Bank Merger
|16
|5218
|270

Concept of Merger and Acquisition : Report
|14
|1999
|184