ACC303 Company Accounting: Consolidation Statement Analysis

This memorandum, prepared for a university-level company accounting course (ACC303), analyzes a company's financial statements with a focus on consolidation. It examines the preparation of consolidation statements, emphasizing the inclusion of subsidiary company assets, liabilities, and equity. The memo delves into required disclosures in the annual report, highlighting corporate governance, sustainability, and the role of the audit committee. It also addresses acquisitions, goodwill, and the presentation of the annual report in accordance with accounting standards. Additionally, the memo discusses the importance of accounting policies and estimations, particularly regarding the valuation of assets like land and buildings. The analysis references relevant accounting standards and provides insights into how companies present financial information to stakeholders.

Running head: COMPANY ACCOUNTS
COMPANY ACCOUNTS
Name of the Student
Name of the University
Author Note

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Memorandum
To: Board of Directors
From: Employee
Date – 3rd September, 2019
Subject – Details about Consolidation Statement.
Consolidation in the Company
Consolidation financial statement are the financial statement in which the asset, liability,
income and equity of the parent company and the subsidiary company (Armstrong et al.,
2015). Company had to prepare the financial statement properly by taking into consideration
the subsidiary company asset and liabilities.
AS per the FASB Statement No 94, the consolidated statements are prepared as:
 One company should prepare is holding 50% so it should able to prepare the
consolidated statement.
 Company should prepare if the majority of board is of the company
Company should prepare the financial statement even the subsidiary company is preparing
the financial statement as this will help them to gain the knowledge of subsidiary company
business activities. The subsidiary company is able to perform all the activities separately, so
the holding company can know the activities properly in the business. It help them to get a
detailed information as how the company is performing as a whole which include both
holding and subsidiary company.
Disclosure in Annual Report

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Each company should able to the disclosure all the related activity in the company business
so that the user is able to know how the company able to perform the activities in the
business. Company should provide proper disclosure in the company as this will help the
company to give proper financial information in the business, it should follow all the rule and
norms in regards of the preparation of annual report (Static1.squarespace.com. 2019). The
director and the management should take into consideration all the factor which should be
informed to the shareholder and it should disclose all the matter to company shareholder
(Tricker and Tricker 2015). This will help the company to gain the confidence of the financial
user as it able to get all the information of company business. Harvey Norman is showing all
the related document which are required by the company to submit in their annual report. As
per the company annual report it can seen the that they have given proper disclosure in the
corporate governance, Sustainability and Audit Committee.
Corporate Governance
It shows how the company is able to perform the business with regards of the rules and
process in the business activity. It shows how the company is able to perform the activity in
the business (De Haan and Vlahu 2016). The company financial reports show that the
company is able to manage all the corporate governance properly in the business. It shows
how the company is able to carry its business activities properly in the business. It shows how
the company is able to make different strategies in the business so that it will to gain more
amount of business in the company. This shows all the initiative which the company has
taken for the environment and able to gain advantage in the company business as this will
increase the loyalty of customer in company business. The company is able have proper
board which able to carry its business activities in regards of Corporate Governance as it have
to maintain the compliance of relative framework in the business. It also include the key
evaluation program as this will help the company to train and educate their staff to carry its

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business activities. It able to achieve the key performance indicator in the business so than
can carry its operation easily. It maintained the effective compliance and risk management
compliance.
Audit Committee
Company is able to carry the audit committee in their business activities; these are the portion
which able to carry in the business activities properly and effectively in the business. The
company is able to show all the details which are there in the Audit Committee as it show that
the committee members are Graham Charles Patron, Kenneth William Gunderson-Briggs and
Christopher Herbert Brown (Static1.squarespace.com. 2019). This are the members which the
company has in their audit committee, as they are the one who able to carry all the function
of audit committee is able to take necessary decision in regards of the audit in the company.
The committee also assist the external auditor and help them to carry the audit process in the
company, as it have all the detailed document so this help the auditor to carry proper audit
process in the business. The company audit committee is able to ascertain the risk that is
associated in company financial business, as these approaches help them to create long term
shareholder value in the business. The risk committee has four executive director which have
divided the responsibilities between themselves. The Audit Committee is able to evaluate the

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Internal Audit in the company, as it take into consideration of system of internal control, risk
associated in the internal control and also show the risk management protocol in the company
financial statement.
Sustainability
These are the report which company have to give separately and not included in the annual
report, these reports show how the company is working for its environment. These reports
show the analysis of company strategies as how they will able to comply with the corporate
governance requirement (McCahery, Sautner and Starks 2016). It show how the company is
able to comply with all the norms in regards of corporate governance in the business. The
company Harvey Norman is having its own sustainability report which show all the company
aspects in regards of sustainability report.
Acquisition in the Company
Acquisition is the process which is carried by company when it is taking charge of another
company, as in this the company is taking the business of other company and adding its
business activities in the company business (Perera and Chand 2015). This help the company
to expand its business operation which will increase the overall earning of the company in the
business.
As per the company financial statement, it can see that there are no details of the acquisition
so it signify that there is no such operation in the company. This show company is not going

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for any kind of expansion in the business and able to run it business operation easily in the
business. The company financial statement is not showing any kind of detailed information
which can show that there is any kind of business in the company.
Goodwill part is shown in the non-current asset, it is a kind of asset which help the company
to gain more revenue in the business (Schroeder, Clark and Cathey 2019). The detail of the
goodwill is given under the note from where the financial user can take necessary decision in
regards of company financial statement. The notes of account show all the details of goodwill
as how the company is able to acquire the asset as well as how able to value the same in the
financial statement.
Disclosure in company annual report
Presentation of Annual Report
Company should present the financial report as per the accounting standard so this will help
the user to understand the report easily in the business, company should provide all the
detailed information which will help the user to get a good image of company performance in
the business. Directors should ensure that annual report is made by keeping in mind all the
required regulation for the preparation of financial statement (Yermack 2017). The company
has prepared the annual report properly and disclose all the material fact in the company
statement. Company is following all the policy properly in the business and able to prepare its
annual report in regards of accounting standard in the business.
Estimation of Accounting Policies
Company should have proper estimation in business so this will help them to carry its
business activities easily and effectively (Static1.squarespace.com. 2019). It should show all

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the estimation in the annual report with proper justification which will help the company
financial user to get knowledge about the estimation and why the company has taken such
kind of estimation in the business. Company estimation should be proper and is to be related
to industry norms. This also help them to gain the confidence of auditor as if the company has
provided proper justification of estimation so auditor will give them a proper auditor report
that will increase there brand value in the market. Company has carried its land and building
value at fair price. The value is been determined by the external valuers or reviewed by
Property Review Committee and director of company. The investment property for
development is valued at fair market value if that can be determined. Company not able to
determined the fair market value than it should value it in cost.

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Reference
Armstrong, C.S., Blouin, J.L., Jagolinzer, A.D. and Larcker, D.F., 2015. Corporate
governance, incentives, and tax avoidance. Journal of Accounting and Economics, 60(1),
pp.1-17.
De Haan, J. and Vlahu, R., 2016. Corporate governance of banks: A survey. Journal of
Economic Surveys, 30(2), pp.228-277.
McCahery, J.A., Sautner, Z. and Starks, L.T., 2016. Behind the scenes: The corporate
governance preferences of institutional investors. The Journal of Finance, 71(6), pp.2905-
2932.
Perera, D. and Chand, P., 2015. Issues in the adoption of international financial reporting
standards (IFRS) for small and medium-sized enterprises (SMES). Advances in
accounting, 31(1), pp.165-178.
Schroeder, R.G., Clark, M.W. and Cathey, J.M., 2019. Financial accounting theory and
analysis: text and cases. John Wiley & Sons.
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https://static1.squarespace.com/static/54803162e4b08e1b8a472201/t/
5bad8412f4e1fcd2edb86026/1538098250289/2018-Annual-Report.pdf
Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and
practices. Oxford University Press, USA.
Yermack, D., 2017. Corporate governance and blockchains. Review of Finance, 21(1), pp.7-
31.