Accounting and Reporting Issues in Consolidated Financial Statements

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

2FINANCIAL ACCOUNTING AND REPORTING
Table of Contents
Introduction:...............................................................................................................................3
Issue 1:.......................................................................................................................................3
Issue 2:.......................................................................................................................................4
Issue 3:.......................................................................................................................................6
Conclusion:................................................................................................................................6
References:.................................................................................................................................8

3FINANCIAL ACCOUNTING AND REPORTING
MEMORANDUM
To: Mr. Daniel Ford, Director of Power Ltd
From: Julia Edwards, CFO of Power Ltd
Date: 17 May 2019
Subject: Accounting and Reporting issues related to Consolidated Financial Statement
Introduction:
This memorandum is prepared to discuss the concept of financial accounting and
reporting policies and procedures in respect of various financial transactions. There are
various corporate restructuring transactions which needs proper treatment in the financial
books of accounts and proper reporting and disclosure is also required for that. Corporate
restructuring transaction includes acquisition of merger and acquisition of business and
various shares and capital related transactions. Assets are recorded in the books of accounts at
their historical costs, but the inflation in the market may be reflected in the assets prices in the
books of accounts. Therefore, to show the true balance of accounts or the show the true
financial position of a business organisation, it is required to revalue the assets and liabilities
of a company to its fair market value (Biondi and Zambon 2013). In the following parts of
this memorandum, some of such important accounting treatment and procedures have been
analysed and described.
Issue 1:
There are various methods of business expansion and growth. Merger and acquisition
is one of them, in this system an existing business unit is acquired to increase the business
volume and operations. When the company acquires all the controlling power of an existing
company, the assets and liabilities of the target company must be consolidated in the financial
statement of acquiring company (Biondi and Zambon 2013). This process is known as the