Corporate and Financial Reporting

Running head: CORPORATE AND FINANCIAL REPORTING
Corporate and Financial Reporting
Name of the Student:
Name of the University:
Author’s Note

CORPORATE AND FINANCIAL REPORTING
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Executive Summary
The main purpose of the assessment is to discuss the acquisition process and the
accounting treatment which is associated with the same. The assessment considers the
case of JKY ltd which is going to acquire FAB ltd and therefore requires an appropriate
strategy for reporting the information in the consolidated financial statement. The
assessment would also be providing information regarding intra-group transactions and
how the same are to be treated in the books of accounts. The assessment further
emphasises on providing appropriate disclosures relating to minority interest and other
treatments which are undertaken in the annual report of the business.

CORPORATE AND FINANCIAL REPORTING
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Table of Contents
Introduction........................................................................................................................3
Answer to Part A................................................................................................................3
Answer to Part B................................................................................................................5
Answer to Part C................................................................................................................7
Conclusion.........................................................................................................................8
Reference..........................................................................................................................9

CORPORATE AND FINANCIAL REPORTING
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Introduction
In a business environment where immense competition lies, merger and
acquisition are a quite common aspect. The merger and acquisition are undertaken by
businesses for the purpose of strengthening their businesses and facing competition.
The assessment which is discussed below also deals with the case of acquisition of
FAB Ltd by JKY ltd. The reasons for acquisition are not relevant to the study but the
methods which is used by the management of JKY ltd for the purpose of acquisition and
reporting for the same is the main basis of the first part of the study (Shah, Liang and
Akbar 2013). The second part of the paper would be dealing with intra-group
transactions and the accounting treatments for the same. The study would be citing
examples of intra-group transaction so that a clearer meaning can be derived from the
same. The final part deals with the reporting of non-controlling interests and how the
same are shown in the consolidated financial statements of the business.
Answer to Part A
The acquisition strategy which is followed by a business also provides a
guideline which business needs to follow for reporting of financial information of the
business. The business of FAB ltd which is considered was acquired by JKY ltd and for
this purpose the strategy which was applied would be discussed. The two strategies
which are used by the business for conducting acquisition of a business are
consolidation accounting and equity accounting (Müller 2014). The decision regarding
which strategy is to be applied by the business for reporting consolidation transactions
depends on the senior management of the business. The two methods which are
available to the management of JKY ltd are discussed below in details:
Consolidation method of accounting:
This method is considered to be an essential method in consolidated accounting
where the assets and liabilities are accumulated for both the parent company and
subsidiary company and shown in the balance sheet of the company. The method
analyses the involvement of the parent company in the business of subsidiary and on
the basis of the same accounting transactions are recorded in the financial reports. The
income and expenses which is associated with the subsidiary company is also to be
listed in the income statement. According to “Paragraph B86 of AASB 10”, the
consolidated financial statement includes all the expenses, income, assets and liabilities
of the business for appropriate presentation of the financial results of the business
(Aasb.gov.au. 2019). The process of consolidation also comes across transactions
which has taken place between subsidiary and parent company which needs to be
eliminated or set off. The set off process is followed for avoiding a circumstance of
double counting in the accounting records and it is therefore suggested that elimination
of intercompany transactions is the best approach which can be followed by a business.
The provisions of AASB 10 includes a para B88, which sets out the measuring
criteria for the different elements which are represented in the financial statements and
also explains how the sane needs to be shown in the consolidated financial statements
of the business (Aasb.gov.au. 2019). The criteria require the management of JKY ltd to