Page 1 of 3 123 LastLast
Results 1 to 10 of 21

Thread: 21 Accounting Standard 21 - Consolidated Financial Statements - AS 21

  1. #1
    Accounting Standards
    Guest

    Default 21 Accounting Standard 21 - Consolidated Financial Statements - AS 21

    Accounting Standard (AS) 21
    (issued 2001)
    Consolidated Financial Statements

    (This Accounting Standard includes paragraphs set in
    bold italic type and plain type, which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting Standard should be
    read in the context of its objective and the Preface to the Statements of Accounting Standards
    1.)

    Accounting Standard (AS) 21,

    ‘Consolidated Financial Statements’, issued by the Council of the Institute of Chartered Accountants of India, comes into effect in respect of accounting periods commencing on or after 1-4-2001.

    An enterprise that presents consolidated financial statements should prepare and present these statements in accordance with this Standard.
    The following is the text of the Accounting Standard.


  2. #2
    Accounting Standards
    Guest

    Default Objective of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21

    Objective of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21


    The objective of this Statement is to lay down principles and procedures for preparation and presentation of consolidated financial statements.

    Consolidated financial statements are presented by a parent (also known as holding enterprise) to provide financial information about the economic activities of its group. These statements are intended to present financial information about a parent and its subsidiary(ies) as a single economic entity to show the economic resources controlled by the group, the obligations of the group and results the group achieves with its resources.
    Last edited by Accounting Standards; 12-08-2010 at 06:20 PM.

  3. #3
    Accounting Standards
    Guest

    Default Scope of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21

    Scope of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21

    1. This Statement should be applied in the preparation and presentation of consolidated financial statements for a group of enterprises under the control of a parent.


    2. This Statement should also be applied in accounting for investments in subsidiaries in the separate financial statements of a parent.

    3. In the preparation of consolidated financial statements, otherAccounting Standards also apply in the same manner as they apply to the separate financial statements.

    4. This Statement does not deal with:

    (a) methods of accounting for amalgamations and their effects on consolidation, including goodwill arising on amalgamation (seeAS 14, Accounting for Amalgamations);

    (b) accounting for investments in associates (at present governed by AS 13, Accounting for Investments3 ); and

    (c) accounting for investments in joint ventures (at present governed by AS 13, Accounting for Investments ).
    Last edited by Accounting Standards; 12-08-2010 at 06:21 PM.

  4. #4
    Accounting Standards
    Guest

    Default Definitions of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21

    Definitions of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21


    5. For the purpose of this Statement, the following terms are used with the meanings specified:
    Control:

    (a) the ownership, directly or indirectly through subsidiary(ies), of more than one-half of the voting power of an enterprise; or

    (b) control of the composition of the board of directors in the case of a company or of the composition of the corresponding governing body in case of any other enterprise so as to obtain
    economic benefits from its activities.

    A subsidiary is an enterprise that is controlled by another enterprise (known as the parent).


    A parent is an enterprise that has one or more subsidiaries.

    A group is a parent and all its subsidiaries.

    Consolidated financial statements are the financial statements of a group presented as those of a single enterprise. Equity is the residual interest in the assets of an enterprise after deducting all its liabilities. Minority interest is that part of the net results of operations and of the net assets of a subsidiary attributable to interests which are not owned, directly or indirectly through subsidiary(ies), by the parent.

    6. Consolidated financial statements normallyinclude consolidated balance sheet, consolidated statement of profit and loss, and notes, other statements and explanatory material that form an integral part thereof. Consolidated cash flow statement is presented in case a parent presents its own cash flow statement. The consolidated financial statements are presented, to the extent
    possible, in the same format as that adopted by the parent for its separate financial statements
    Last edited by Accounting Standards; 12-08-2010 at 06:22 PM.

  5. #5
    Accounting Standards
    Guest

    Default Presentation of Consolidated Financial Statements of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21

    Presentation of Consolidated Financial Statements of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21


    7. A parent which presents consolidated financial statements should present these statements in addition to its separate financial statements.


    8. Users of the financial statements of a parent are usually concerned with, and need to be informed about, the financial position and results of operations of not only the enterprise itself but also of the group as a whole.


    This need is served by providing the users -

    (a) separate financial statements of the parent; and
    (b) consolidated financial statements, which present financial information about the group as that of a single enterprise without regard to the legal boundaries of the separate legal entities.
    Last edited by Accounting Standards; 12-08-2010 at 06:22 PM.

  6. #6
    Accounting Standards
    Guest

    Default Scope of Consolidated Financial Statements of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21

    Scope of Consolidated Financial Statements of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21


    9. A parent which presents consolidated financial statements should consolidate all subsidiaries, domestic as well as foreign, other than those referred to in paragraph 11.


    10. The consolidated financial statements are prepared on the basis of financial statements of parent and all enterprises that are controlled by the parent , other than those subsidiaries excluded for the reasons setout in paragraph


    11. Control exists when the parent owns, directly or indirectly through subsidiary(ies), more than one-half of the voting power of an enterprise.

    Control also exists when an enterprise controls the composition of the board of directors (in the case of a company) or of the corresponding governing body (in case of an enterprise not being a company) so as to obtain economic benefits fromits activities. An enterprisemay control the composition of the governing bodies of entities such as gratuity trust, provident fund trust etc.
    Since the objective of control over such entities is not to obtain economic benefits from their activities, these are not considered for the purpose of preparation of consolidated financial statements. For the purpose of this Statement, an enterprise is considered to control the composition of:

    (i) the board of directors of a company, if it has the power, without the consent or concurrence of any other person, to appoint or remove all or a majority of directors of that company. An
    enterprise is deemed to have the power to appoint a director, if any of the following conditions is satisfied:

    (a) a person cannotbe appointed as directorwithout the exercise in his favour by that enterprise of such a power as aforesaid; or

    (b) a person’s appointment as director follows necessarily from his appointment to a position held by him in that enterprise; or

    (c) the director is nominated by that enterprise or a subsidiary thereof.

    (ii) the governing body of an enterprise that is not a company, if it has the power, without the consent or the concurrence of any other person, to appoint or remove all majority of members of the
    governing body of that other enterprise. An enterprise is deemed to have the power to appoint a member, if any of the following conditions is satisfied:

    (a) a person cannot be appointed as member of the governing body without the exercise in his favour by that other enterprise of such a power as aforesaid; or


    (b) a person’s appointment as member of the governing body follows necessarily from his appointment to a position held by him in that other enterprise; or


    (c) themember of the governing body is nominated by that other enterprise.


    11. A subsidiary should be excluded from consolidation when:

    (a) control is intended to be temporary because the subsidiary is acquired and held exclusively with a view to its subsequent disposal in the near future7; or


    (b) it operates under severe long-term restrictions which significantly impair its ability to transfer funds to the parent. In consolidated financial statements, investments in such subsidiaries should be accounted for in accordance with Accounting Standard (AS) 13, Accounting for Investments. The
    reasons for not consolidating a subsidiary should be disclosed in the consolidated financial statements.

    12. Exclusion of a subsidiary from consolidation on the ground that its business activities are dissimilar from those of the other enterprises within the group is not justified because better information is provided by consolidating such subsidiaries and disclosing additional information in the
    consolidated financial statements about the different business activities of subsidiaries. For example, the disclosures required by Accounting Standard (AS) 17, Segment Reporting, help to explain the significance of different business activities within the group.
    Last edited by Accounting Standards; 12-08-2010 at 06:23 PM.

  7. #7
    Accounting Standards
    Guest

    Default Consolidation Procedures of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21

    Consolidation Procedures of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21


    13. In preparing consolidated financial statements, the financial statements of the parent and its subsidiaries should be combined on a line by line basis by adding together like items of assets, liabilities, income and expenses . In order that the consolidated financial statements present financial information about the group as that of a single enterprise, the following steps should be taken:


    (a) the cost to the parent of its investment in each subsidiary and the parent’s portion of equity of each subsidiary, at the date on which investment in each subsidiary is made, should be eliminated;

    (b) any excess of the cost to the parent of its investment in a subsidiary over the parent’s portion of equity of the subsidiary, at the date on which investment in the subsidiary is made, should be described as goodwill to be recognised as an asset in the consolidated financial statements;


    (c) when the cost to the parent of its investment in a subsidiary is less than the parent’s portion of equity of the subsidiary, at the date on which investment in the subsidiary is made, the difference should be treated as a capital reserve in the consolidated financial statements;


    (d) minority interests in the net income of consolidated subsidiaries for the reporting period should be identified and adjusted against the income of the group in order to arrive at the net income attributable to the owners of the parent; and

    (e) minority interests in the net assets of consolidated subsidiaries should be identified and presented in the consolidated balance sheet separately from liabilities and the equity of the parent’s
    shareholders. Minority interests in the net assets consist of:

    (i) the amount of equity attributable to minorities at the date on which investment in a subsidiary is made; and

    (ii) the minorities’ share of movements in equity since the date the parent-subsidiary relationship came in existence. Where the carrying amount of the investment in the subsidiary is different from its cost, the carrying amount is considered for the purpose of above computations.

    14. The parent’s portion of equity in a subsidiary, at the date on which investment is made, is determined on the basis of information contained in the financial statements of the subsidiary as on the date of investment. However, if the financial statements of a subsidiary, as on the date of
    investment, are not available and if it is impracticable to draw the financial statements of the subsidiary as on that date, financial statements of the subsidiary for the immediately preceding period are used as a basis for consolidation. Adjustments are made to these financial statements for the effects of significant transactions or other events that occur between the date of such financial statements and the date of investment in the subsidiary.


    15. If an enterprise makes two or more investments in another enterprise at different dates and eventually obtains control of the other enterprise, the consolidated financial statements are presented only from the date on which holding-subsidiary relationship comes in existence. If two or more investments are made over a period of time, the equity of the subsidiary at the date of investment, for the purposes of paragraph 13 above, is generally determined on a step-by-step basis; however, if small investments are made over a period of time and then an investment is made that results in control, the date of the latest investment, as a practicablemeasure,may be considered
    as the date of investment.


    16. Intragroup balances and intragroup transactions and resulting unrealised profits should be eliminated in full. Unrealised losses resulting fromintragroup transactions should also be eliminated unless cost cannot be recovered.



    17. Intragroup balances and intragroup transactions, including sales, expenses and dividends, are eliminated in full. Unrealised profits resulting from intragroup transactions that are included in the carrying amount of assets, such as inventory and fixed assets, are eliminated in full. Unrealised losses resulting from intragroup transactions that are deducted in arriving at the carrying amount of assets are also eliminated unless cost cannot be recovered.


    18. The financial statements used in the consolidation should be drawn up to the same reporting date. If it is not practicable to draw up the financial statements of one or more subsidiaries to such date and, accordingly, those financial statements are drawn up to different reporting dates, adjustments should be made for the effects of significant transactions or other events that occur between those dates and the date of the parent’s financial statements. In any case, the difference between reporting dates should not be more than six months.


    19. The financial statements of the parent and its subsidiaries used in the preparation of the consolidated financial statements are usually drawn up to the same date. When the reporting dates are different, the subsidiary often prepares, for consolidation purposes, statements as at the same date as that of the parent. When it is impracticable to do this, financial statements drawn up to different reporting datesmay be used provided the difference in reporting dates is not more than six months. The consistency principle requires that the length of the reporting periods and any difference in the reporting dates should be the same from period to period.


    20. Consolidated financial statements should be prepared using uniform accounting policies for like transactions and other events in similar circumstances. If it is not practicable to use uniform
    accounting policies in preparing the consolidated financial statements, that fact should be disclosed together with the proportions of the items in the consolidated financial statements to which the different accounting policies have been applied.


    21. If a member of the group uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements when they are used in preparing the consolidated
    financial statements.

    22. The results of operations of a subsidiary are included in the consolidated financial statements as fromthe date onwhich parent-subsidiary relationship came in existence. The results of operations of a subsidiary with which parent-subsidiary relationship ceases to exist are included in the consolidated
    statement of profit and loss until the date of cessation of the relationship. The difference between the proceeds from the disposal of investment in a subsidiary and the carrying amount of its assets less liabilities as of the date of disposal is recognised in the consolidated statement of profit and loss as the profit or loss on the disposal of the investment in the subsidiary. In order to ensure the comparability of the financial statements from one accounting period to the next, supplementary information is often provided about the effect of the acquisition and disposal of subsidiaries on the financial position at the reporting date and the results for the reporting period and on the
    corresponding amounts for the preceding period.

    23. An investment in an enterprise should be accounted for in accordance with Accounting Standard (AS) 13, Accounting for Investments, from the date that the enterprise ceases to be a subsidiary
    and does not become an associate.


    24. The carrying amount of the investment at the date that it ceases to be a subsidiary is regarded as cost thereafter.

    25. Minority interests should be presented in the consolidated balance sheet separately from liabilities and the equity of the parent’s shareholders. Minority interests in the income of the group should also be separately presented.

    26. The losses applicable to the minority in a consolidated subsidiary may exceed the minority interest in the equity of the subsidiary. The excess, and any further losses applicable to theminority, are adjusted against themajority interest except to the extent that theminority has a binding obligation to, and is able to,make good the losses. If the subsidiary subsequently reports profits,
    all such profits are allocated to the majority interest until the minority’s share of losses previously absorbed by the majority has been recovered.

    27. If a subsidiary has outstanding cumulative preference shares which are held outside the group, the parent computes its share of profits or losses after adjusting for the subsidiary’s preference dividends, whether or not dividends have been declared.
    Last edited by Accounting Standards; 12-08-2010 at 06:24 PM.

  8. #8
    Accounting Standards
    Guest

    Default Accounting for Investments in Subsidiaries in a Parent’s Separate Financial Statements of Accounting Standard (AS) 21 Consolidated Financial Statement

    Accounting for Investments in Subsidiaries in a Parent’s Separate Financial Statements of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21


    28. In a parent’s separate financial statements, investments in subsidiaries should be accounted for in accordance with Accounting Standard (AS) 13, Accounting for Investments.
    Last edited by Accounting Standards; 12-08-2010 at 06:24 PM.

  9. #9
    Accounting Standards
    Guest

    Default Disclosure of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21

    Disclosure of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21


    29. In addition to disclosures required by paragraph 11 and 20, following disclosures should be made:

    (a) in consolidated financial statements a list of all subsidiaries including the name, country of incorporation or residence, proportion of ownership interest and, if different, proportion of voting power held;


    (b) in consolidated financial statements, where applicable:

    (i) the nature of the relationship between the parent and a subsidiary, if the parent does not own, directly or indirectly through subsidiaries, more than one-half of the voting power of the subsidiary;

    (ii) the effect of the acquisition and disposal of subsidiaries on the financial position at the reporting date, the results
    for the reporting period and on the corresponding amounts for the preceding period; and



    (iii) the names of the subsidiary(ies) of which reporting date(s) is/are different from that of the parent and the
    difference in reporting dates.
    Last edited by Accounting Standards; 12-08-2010 at 06:25 PM.

  10. #10
    Accounting Standards
    Guest

    Default Transitional Provisions of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21

    Transitional Provisions of Accounting Standard (AS) 21 Consolidated Financial Statements – AS 21


    30. On the first occasion that consolidated financial statements are presented, comparative figures for the previous period need not be presented. In all subsequent years full comparative figures for the previous period should be presented in the consolidated financial statements.
    Last edited by Accounting Standards; 12-08-2010 at 06:26 PM.

Tags for this Thread

Bookmarks

Posting Permissions

  • Register / Login to post new threads
  • Register / Login to post replies
  • Register / Login to post attachments
  • You may not edit your posts
  •