What is Consolidation? Under AASB 10, a consolidated financial statement is required when a parent company owns a controlling interest in another company aka the subsidiary 1@ main purpose of consoldation is to represent the financial perfarmance/position of & group of companies as a single economic unit, This is achieved through the combination of the individual financial statements The st e consolidation process are- Analysis BCVR entries Pre-Acquisition Entries intragroup Transactions Non.Controlling interests The best methad to approach consolidation is through understanding the purpose behind the journal entries. The step-by-step appraach helps break down the large chunks of information in the question which may be overwhelming at first. The theary of consolidation is easy to understand but the application is rather difficult, The pre-class material was very informative but twas through the practice of the in-class exercises and textbook questions that process was understood and applied What aspects of the consolidation process are easy to understand? ‘The acquisition analysis and the BCVR entries are quite straightforward and can be calculated easily The acquisition analysis is @ crucial slep as ithelps us understand what the is the Net vaive of ‘al the assets that the parent company has acquired. In fact, the acquisition analysis relates back to the basic accounting equation, that has been rearranged to calculate the OE (OE=A-L). Furthermore, the comparison of the FVINA to the consideration tells us whether there is any bargain or goodrll in the transaction, + Goodwill on acquisition (Consideration > FVINA) * Bargain purchase (Consideration < FVINA)The BCVR account is used to increase or decrease subsidiary's reconied assets and liabilities book values to fair value, recognise previously unrecognised assets (@ ‘erates ntangyt ise aubsksiary's contingent labities as habs Combination Valuation Reserve (BCVR) account Fd these adjust BCVR is similar to the Asset Revaliation Surplus What are the confusing aspects of the consolidation process? al entries relating tory were particularly chaiien otes that were bi ’ transactions when there are transfers from the BCVR accounts partial goodwill method Lastly, The nan-controling interest (NCI). | found that the pre-ciass module was rather confusing but the questions that were discussed in the first tutorial were very helpful and logical