Corporate Accounting Report: Consolidation of Companies Analysis

This report provides a comprehensive analysis of corporate accounting, specifically focusing on the concept of consolidation. It examines the process of combining financial statements of multiple entities, such as through mergers, acquisitions, or takeovers, to present a unified financial picture. The report delves into the advantages and disadvantages of consolidation, exploring its impact on various industries, particularly banking and municipal corporations. It highlights the importance of consolidation in achieving business efficiency, tax benefits, and compliance with various laws. The report analyzes six articles to evaluate the concept of consolidation, discussing its role in protecting businesses from collapse, the influence of governmental intervention, and the impact on market share and economic trends. It also covers the role of consolidation in presenting accurate financial information to shareholders, the challenges and benefits of consolidation, and the tax advantages that can be obtained. The report also contains tables and data to support the findings of the analysis.

Corporate Accounting

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

Consolidation is a process of preparing business statements which includes combining of
assets, equity, liability and operating accounts of two or more firms working under a same parent
organisation. Consolidation can be done of two different organisations which are combined by
the way or merger, acquisition or take over. Preparing these statements has become common for
companies which are performing under multiple entities. Primary aim of preparing these
statements is to hide business collapse. Companies operating under a group structure can be
beneficial with business efficiency, tax advantages and various laws. Six business articles are
analysed in order to evaluate concept of consolidation.
Main report
According to Dolar and Burak, consolidation in banking industry is likely to raise various
consequences. Consolidation of large banking companies effects ability of small business of
obtaining funds. In any industry, there are few market players which affect the profitability and
growth of other small business operating in same sector. As no market place is perfect
competition market, few companies enjoys major market share due to which small firms has to
suffer. From this debate it is observed that the main reason behind business collapse of small
business is merger or acquisition of large businesses. The concept of consolidation is beneficial
as well as disadvantageous for various firms. It can be said that consolidation of large companies
results in situation of consolidation of small companies. This article is focused to consolidation
of banking companies which states that this process results in protecting business collapse of
large companies but also results in collapse of small companies. This process results in cyclical
economic trend according to which it is expected that consolidation of one company will result
in situation of consolidation of other companies as they will also tend to gain benefit from this
process. This cyclic trend can be prevented with government intervention. Governmental
authorities can control consolidation by various legislations and laws.
From this article, various findings which are gained are due to consolidation of various
large companies, small businesses has to suffer as their profit making ability is decreased. Major
market share is in the hands of few large companies when it comes to banking sector. Evidence
of these findings are given below:
Scale of companies GDP
Fortune 500 companies 73.00%
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Other thousands companies 27.00%
From the above table, it can be analysed that that major profit, market share or
contribution towards GDP is because of few large companies whereas a minor percent of
country's GDP is contributed by numerous small companies this situation has raised because of
consolidation of large companies.
According to Aulich, Sansom and McKinlay (2014), consolidation is a process which has
brought fresh look of municipal authorities. This article is focused on municipal consolidations
of Australia and New Zealand. Consolidation has various methods such as merger, acquisition,
amalgamation, establishing a sister venture and many more. Every form of consolidation has
different impact on the economy. This article is more concerned with impact on economy rather
than on any business organisation. This research articulates the fact that local government adopts
mechanism to consolidate with each other. This collaboration provided an evidence that
amalgamation necessarily yields substantial economies of scale. The reason behind this process
used by municipal corporation is to earn efficiency gains. This process provides various
opportunities to achieve economies of scale. Municipal organisations work for public due to
which it is hard to earn reasonable amount if profit due to which various corporations of
Australia decided to consolidate with each other in order to restrict the scope of business
collapse. There is a major issue in the case of consolidation of municipal corporations as these
are governmental authorities and they can be a danger to democracy. From this article, various
findings are as follows. Municipal organisations of Australian governments are tend to use
process of consolidation in order to acquire more funds and facilitate their society. Evidence for
this findings is mentioned below as an example:
Australia currently has 560 local councils which shows the drastic fall in the local
councils due to consolidation. These councils prepare their financial statements using
consolidation in order to represent high earned profit.
According to one of famous author named T.A. Lee, Robert H. Parker the moral
obligation is that report and statements are presented periodically to shareholder that help in
action of investments. The general purpose of consolidation is presenting the legal annual report
that 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 or
resources to obtain information. It expound the traditional position role of directors, formal
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information of management ability of using organisation resources and achieving company goal.
This consolidated statements are used as important evidence for investments decision making
that relate to company performance and earning capacity. These collaboration are immediate
purpose of firm financial report but it has further important also such as description of events,
transaction, profits and failure or losses. This information is required by the management of
company to report to the outside world i.e. shareholder and other investors.
The finding of the Author is that these statements provide the actual position and
behaviour of company operation especially for business changes and developments. They also
find that, consolidation is consider for development of company financial statements by which
they can communicate those information to public that help in financial decision making.
Hopefully, Author Find that consolidation helps to reveal the accounting and reporting problem
that arise at the time of preparation of financial statements by the management.
According to Dekoninck, Domingo and O'Hare (2016), Consolidation of companies not
only impacts the functioning of other market or market but it influences economy of the
Australia. This article is based upon frameworks of ecodesign which has faced challenges and
benefits due to consolidation. Core research of this article is that what are the tools and
techniques which helps in managing the consolidation so that it can be beneficial for the
economy. Consolidation is a process which can either result in complete destruction or complete
growth. In order to manage the trend of consolidation. Government of Australia has decided to
implement various techniques such as ecodesign implementation, management tools and
identification of resistance among companies. Banking industry is best example for managing
the consolidation. Government of Australia has identified all the challenges which are present in
consolidation and then develops measures in order to manage all trends of consolidation. These
challenges which are identified by Australian government are strategy, collaboration,
management and knowledge. These issues are solved by Australian government in order to
manage their banking sector.
From this article, it has found that if consolidation is carried with full efficiency than their
economy can gain various advantages. Banking industry is the sector which has gained various
advantages from the process of consolidation. Evidence of this finding is the profits which are
attianed by the banks of Australia after following the concept of consolidation.
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According to Kristian J.Ruming, consolidation is a urban concept which is used to
manage high profits by the company. Australian states are facing various challenges when it
comes to consolidation of companies. This article articulates that companies are facing various
issues due to internal and external factors such as political, environmental, competition and many
more. In order to manage the losses and earn profits, organisations decide to consolidate and
merger with other competitors.
From this article, findings are mentioned as follows. Consolidation is a urban concept
which is used by various companies of Australia. The evidence to above findings are,
consolidation is a process which is only used by company of metropolitan cities. For example:
Sydney, a metropolitan city of Australia has highest degree of consolidation.
This article is based upon the tax benefits because of the consolidation of companies in
Australia. The government of Australia have determined that the companies in the country are
not having good profits and it will also affect the economy. It help the companies to reduce tax
liabilities. Consolidation will combine two different firm and than it will divide tax liabilities for
those companies. Tax consolidation is a source of increased profitability and good performance
for the companies. Australian government is very concerned with the economy deflation hence it
has decided to provide a fixed rate of tax benefits to those companies who have consolidated
because it will contribute to the economic growth. Tax benefits is a technique which can be
obtained from the process of consolidation as when an entity amalgamate with other entity it has
to various tax benefits which are provided by the government of the country. In this case,
Australian government (Tax benefits from consolidation, 2018).
It has been founded form this article that companies rare consolidating in Australia
because it provide tax benefits by reducing tax liabilities for the companies. The evidence for this
finding is that company A and company B has consolidated in order to reduce their tax liabilities.
Additional report
Main reports is based on six articles that are related with the concept of consolidation can
hide imminent business collapse. Consolidation refers to the combination of business to improve
the efficiency and enhance the effectiveness of their company. It can be done by two different
firms that to become company and earn higher profits by enhancing the sales and reducing their
expenses. It help two or more companies to combine in the form of merger, acquisition, takeover
etc. It can help the companies that are combined by the consolidation to increase their profits and
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sales. The companies who are facing loss from a long period than it is a good option for them to
overcome the same. This concept of very beneficial for the risk bearing and loss making
companies to consolidate with a company which is having good profits and may help to recover
the another company.
From the first article it has been observed that the consolidation of large companies can
affect the small companies and they have to suffer because of large companies and it will effect
their profit making ability but for large companies it will help to increase their profits for coming
years. It has been also identified that most of the market share is acquired by the large companies
and there is a small market share is remained for small companies which will create losses for
them. It is a result of competitive market in which big companies enjoys more market share and
little companies has to suffer due to large once because there is no market left for them to target.
From the second article the finding which is analysed is that the municipal organisations
of Australian governments are using process consolidation to acquire more funds so that they
may produce more products according to the demand to facilitate the Australian society. This
article is based on the impact of consolidation on the economy of a country. The government of
Australia is not having enough funds to produce products so it is consolidating municipal
organisations and firms to show higher profits and increase their ability to make more
commodities for the society. Municipal organisation are working for social welfare and it is not
easy for them to earn high profits so the Australian Government has decided to consolidate them.
From the third article the finding which is identified is that the consolidated financial
statements of a company shows the actual financial status and performance of the company. It
helps the consolidated companies to revel their actual data to analyse accurate profitability. This
article has reflected that consolidation help the owner of the company to identify problems in its
reporting system and errors in the same. It will also lead the organisation toward success if it can
help to identify errors, because the owner will try to modify the reporting system and than all the
problems get resolved.
From the forth article it has been founded that if consolidation is adopted by the
companies it will help the economy to grow faster because it help two organisations to overcome
their losses and perform their activities more effectively. It enhances their quality of business
execution and operational activities. In this article the author is defined that Government of
Australia have decided to implement different types of techniques to identify growth
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opportunities for their economy, as there is lack of funds for municipal organisations. It has
facilitated the banking industry of the country by consolidating the different banks and they have
gained profits with they help of this concept.
From fifth Article it has been found that consolidation is a urban concept which is used
by different companies to increase their profits. It help the companies to ears higher profits after
consolidation because when two companies work together it will this will increase their work
force and also increase their affectivity. The companies can reduce the effect of external and
internal forces that can leave impact on the productivity and operational activities of the
organisation. It is mainly used by the companies who are based in metropolitan cities. In
Australia the highest rate of consolidation is recorded in Sydney which is metropolitan city. It is
a good concept for the companies to higher the profits and lower the risks and losses.
From the sixth article the finding which is identifies is that most of then companies are
consolidating because they get tax benefits because of consolidation as the government of
Australia has declared tax benefits for the companies, it has motivated the companies to
consolidate. This concept will going to reduce the amount of tax which has to be paid by the
companies who are now consolidated. This also help them to divide the net payable tax for the
year. The companies are always dealing with most of the tax problems. Government help the
companies because it will also help to increase the level of growth of the economy of Australia.
Government is helping the companies to consolidate because this will help them to generate
funds to perform their activities which will going to benefit to the Australian society.
Group summary report
This report articulates the efforts of group. The above six articles about consolidation are
analysed and then evaluated in order to build an understanding about the concept that how
consolidation helps in preventing business collapse. Time scale about every meeting is
developed below which includes day, time and duration of group meetings in which content
about articles are discussed about group meetings.
Group meetings Work to be done Day Time Work allotted to
members
Meeting 1 Identification of
articles
1 0900 hours Group task
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Meeting 2 Finding relevancy
of articles
2 1000 hours Group task
Meeting 3 Article 1 3 0800 hours Member code 101
Meeting 4 Article 2 4 1300 hours Member code 102
Meeting 5 Article 3 5 1700 hours Member code 103
Meeting 6 Article 4 6 0700 hours Member code 104
Meeting 7 Article 5 7 0730 hours Member code 105
Meeting 8 Article 6 8 1000 hours Member code 106
From the above time scale, it has been ascertained that with the group effort of 6
members, this assignment can be completed within 8 days. In the time frame of these 8 days, 8
meetings has to be conducted. Almost every task is divided and allocated to single group
member. But the identification and evaluation of research articles is done by all the members
collectively so that every members can have an understanding about the topic. Tasks are divided
according to the articles. While allocating the tasks to different group member, the concept of
equality was considered in mind so that all members can sense the belief of equal participation in
the project. Meetings were usually conducted at the time when all the group members feel
comfortable. After 8 days of completion of the project, it has been ascertained that all members
has participated equally and gave their best in order to effectively complete the required
assignment or essay.
The above time scale is the presentation of all the work which is done by suitable group
members. Major aim behind developing group summary report is to ensure that all the members
has done assignment to their best knowledge and has participated equally. Usually the time
duration of the meeting depends upon the content which is needed to be discussed in the
meeting. Time duration which is set for these meetings is 1 hour which can be extend to 3 hours.
Group summary report which is presented above has discussed various outcomes about the
meetings.
From the above project report it has been concluded that consolidation is process of
combining the business that are making losses form a long period or one is making loss and
combines in to another to stop the possibility of losses. It help the organisations to maintain their
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financial statements accurately and stop the business from collapse. If an organisation is facing
losses from a long period than consolidation is a good option for that company rather than
winding up or selling it to another because it will help the owner to keep the authority and also
help the business to overcome from losses. Consolidation is a tool which may help different
businesses to reduce the losses and pay for their liabilities, by combining with another business.
It increases the effectiveness and efficiency of performing different activities. This process even
helps in evading tax liability.
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REFERENCES
Journals:
Aulich, C., Sansom, G., & McKinlay, P. (2014). A fresh look at municipal consolidation in
Australia. Local Government Studies. 40(1). 1-20.
Dekoninck, E. A., and et.al. (2016). Defining the challenges for ecodesign implementation in
companies: Development and consolidation of a framework. Journal of Cleaner
Production. 135. 410-425.
Dolar, B. (2014). BANK CONSOLIDATION AND SMALL BUSINESS LENDING IN THE
AFTERMATH OF THE US FINANCIAL CRISIS: EVIDENCE FROM
CALIFORNIA'S BANKING MARKETS. Journal of International Business
Disciplines. 9(1).
Lee, T.A. and Parker, R.H., 2014. Company financial statements: an essay in business history
1830–1950. In Evolution of Corporate Financial Reporting (RLE Accounting)(pp. 27-
51). Routledge.
Online
Consolidation is a urban concept. 2018. [Online]. Available through:
<https://www.sciencedirect.com/science/article/pii/S0264837714000301>
Tax benefits from consolidation. 2018. [Online]. Available through:
<https://www2.deloitte.com/au/en/pages/tax/articles/long-awaited-tax-consolidation-
measures-released.html>
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