CONSOLIDATED FINANCIAL

STATEMENT
(Subsequent to the Date of
Acquisition)
Uniform Accounting Policies Assumptions…

 Uniform Accounting Policies shall be used for

like Transactions.

 All entities within the group shall apply the

same Accounting Policy.
Techniques for Consolidation

 Combine Assets, Liabilities, Equity, Income &

Expenses of the Parent & All Subsidiaries.
 Eliminate all Intercompany Assets, Liabilities,
Equity, Income & Expenses of all entities within
the group.
 Eliminate Investment in Subsidiary and Equity
Accounts of the Subsidiary.
 Recognize the Share of NCI in the Subsidiary NET
Income
CONSOLIDATED COMPREHENSIVE INCOME

 PARENT COMPANY APPROACH

Income presented are those income
accruing to the parent ONLY

 ENTITY APPROACH
Income presented are those accruing to the
parent and NCI.
Accounting for Investment in Subsidiary

 At Cost
1. Used when the Acquirer owns more than
half of the voting share
2. Investment in Subsidiary is retained at its
original figure.
3. Income is limited to DIVIDEND only.
Accounting for Investment in Subsidiary

 At Fair Value
 Using the Equity Method
1. Used when the Acquirer owns 20% or more
(up to 50%) of the voting share.
2. Commonly used for Non Controlling
Interests
CONSOLIDATION PROCESS
WITH NCI
WITH GOODWILL
NET ASSETS EQUAL TO FMV
Initial Entries

Investment in Subsidiary XXX

Cash / NCA / Payable / SC XXX

Cash XXX
Dividend Income XXX
(To Recognize the Dividends Distributed)
Eliminating Entries

(1) Dividend Income XXX

NCI XXX
Dividends Declared XXX

(2) Common Stock XXX

Share Premium XXX
Retained Earnings XXX
Goodwill XXX
Investment in Subsidiary XXX
NCI XXX
Eliminating Entries

(3) NCI in Subsidiary XXX

NCI XXX
(To Recognize the share of NCI in the Net Income of Subsidiary)
COMPREHENSIVE ELIMINATING ENTRY & CONSOLIDATE
PARENT SUBSIDIARY
INCOME ADJUSTMENT D

SALES XXX XXX XXX

DIVIDENDS XXX XXX (1) XXX

TOTAL
XXX XXX XXX
REVENUE
COST OF
XXX XXX XXX
SALES
NET
XXX XXX XXX
INCOME
 RETAINED ELIMINATING ENTRY & CONSOLIDATE
PARENT SUBSIDIARY
EARNINGS ADJUSTMENT D

R/E (BEG) XXX XXX XXX (2) XXX

NET
XXX XXX XXX
INCOME
DIVIDEND
S
XXX XXX XXX (1) XXX
DECLARE
D

R/E (END) XXX XXX XXX

 SUBSIDIAR ELIMINATING ENTRY & CONSOLIDATE
BALANCE SHEET PARENT
Y ADJUSTMENT D

CURRENT
XXX XXX XXX
ASSETS
INVESTMENT XXX XXX (2) XXX
GOODWILL XXX (2) XXX

TOTAL ASSETS XXX XXX XXX

LIABILITIES XXX XXX XXX

EQUITY XXX XXX XXX (2) XXX

XXX XXX (2)
NCI XXX
(1) XXX (3)
CONSOLIDATION PROCESS
WITH NCI
WITH GOODWILL
NET ASSETS DIFFERENT WITH
FMV
Initial Entries

Investment in Subsidiary XXX

Cash / NCA / Payable / SC XXX

Cash XXX
Dividend Income XXX
(To Recognize the Dividends Distributed)
Eliminating Entries

(1) Dividend Income XXX

NCI XXX
Dividends Declared XXX
(2) Common Stock XXX
Share Premium XXX
Retained Earnings XXX
Assets / Liabilities (Adj.) XXX
Goodwill XXX
Investment in Subsidiary XXX
Assets / Liabilities (Adj.) XXX
NCI XXX
Eliminating Entries

(3) NCI in Subsidiary XXX

NCI XXX
(To Recognize the share of NCI in the Net Income of Subsidiary)
(4) CGS XXX
Expenses XXX
Assets XXX
(To Adjust CGS, Assets, Expenses for the difference in FMV)
COMPREHENSIV ELIMINATING ENTRY & CONSOLIDATE
PARENT SUBSIDIARY
E INCOME ADJUSTMENT D

SALES XXX XXX XXX

DIVIDEND
XXX XXX (1) XXX
S
TOTAL
XXX XXX XXX
REVENUE
COST OF
XXX XXX XXX (4) XXX
SALES
NET
XXX XXX XXX
INCOME
 RETAINED ELIMINATING ENTRY & CONSOLIDATE
PARENT SUBSIDIARY
EARNINGS ADJUSTMENT D

R/E (BEG) XXX XXX XXX (2) XXX

NET
XXX XXX XXX
INCOME
DIVIDEND
S
XXX XXX XXX (1) XXX
DECLARE
D

R/E (END) XXX XXX XXX

 SUBSIDIAR ELIMINATING ENTRY & CONSOLIDATE
BALANCE SHEET PARENT
Y ADJUSTMENT D

OTHER ASSETS XXX XXX XXX (2) XXX (4) XXX

INVESTMENT XXX XXX (2) XXX
GOODWILL XXX (2) XXX

TOTAL ASSETS XXX XXX XXX

LIABILITIES XXX XXX XXX

EQUITY XXX XXX XXX (2) XXX

XXX XXX (2)
NCI XXX
(1) XXX (3)
Subsidiary that has Different Reporting
Date
 Subsidiary must present FS that is Similar
with the Reporting Date of the Parent.
 Management assumptions are necessary.
 Difference shall not be more than 3
months.
Accounting for Loss of Control

 Derecognize the Assets, Liabilities from the

Consolidated FS.
 Recognize any Investment Retained @ FMV.
 Recognize Gain or Loss to P & L measured as the
difference between the FMV and Carrying Amount
of Assets & Liabilities of the Subsidiary.
SAMPLE PROBLEM
TO FURTHER
ILLUSTRATE…
 COMPUTATION OF GOODWILL OR GAIN..
CONSIDERATION 4,750,000
NCI (4,750,000 / 80%) X 20% = 1,187,500 1,196,000
5,946,000
FV OF NET ASSETS
ORDINARY SHARES 4,000,000
RETAINED EARNINGS 1,600,000
ADJUSTMENT OF EQUIPMENT 380,000
5,980,000
GAIN ON THE ACQUISITION 34,000
INITIAL JOURNAL ENTRIES

YEAR 2012
INVESTMENT IN SUBSIDIARY 4,750,000
CASH 4,750,000
CASH 56,000
DIVIDEND INCOME 56,000
YEAR 2013
CASH 104,000
DIVIDEND INCOME 104,000
ELIMINATING ENTRIES

YEAR 2012
(1)
ORDINARY SHARES 4,000,000
RETAINED EARNINGS 1,600,000
EQUIPMENT 380,000
INVESTMENT IN SUBSIDIARY 4,750,000
NON CONTROLLING INTERESTS 1,196,000
GAIN ON THE ACQUISITION 34,000
ELIMINATING ENTRIES

YEAR 2012
(2) DIVIDEND INCOME 56,000
NCI 14,000
DIVIDEND DECLARED 70,000
(3) DEPRECIATION EXPENSES 76,000 (380,000 / 5 YEARS)
EQUIPMENT OR AD 76,000
(4) NCI in CI of Subsidiary 52,800
NCI (340,000 – 76,000) X 20% 52,800
 D C CONSOLIDAT
YEAR 2012 CORPORATIO CORPORATIO ELIMINATIONS & ED FIGURES
N N ADJUSTMENTS
56,000 (2)
NET INCOME 900,000 340,000 76,000 (3) 34,000 (1) 1,089,200
52,800 (4)
RETAINED
EARNINGS 3,450,000 1,600,000 1,600,000 (1) 3,450,000
(BEG)
56,000 (2)
NET INCOME 900,000 340,000 76,000 (3) 34,000 (1) 1,089,200
52,800 (4)

DIVIDENDS
220,000 70,000 70,000 (2) 220,000
DECLARED

RETAINED 1,600,000 (1)

EARNINGS 56,000 (2) 34,000 (1)
4,130,000 1,870,000 4,319,200
(END) 76,000 (3) 70,000 (2)
52,800 (4)
1,196,000 (1)
NCI 14,000 (2) 52,800 (4) 1,234,800
ELIMINATING ENTRIES

YEAR 2013
(1)
ORDINARY SHARES 4,000,000
RETAINED EARNINGS 1,600,000
EQUIPMENT 380,000
INVESTMENT IN SUBSIDIARY 4,750,000
NON CONTROLLING INTERESTS 1,196,000
GAIN ON THE ACQUISITION 34,000
ELIMINATING ENTRIES

YEAR 2013
(2) DIVIDEND INCOME 104,000
NCI 26,000
DIVIDEND DECLARED 130,000
(3) DEPRECIATION EXPENSES 76,000 (380,000 / 5 YEARS)
EQUIPMENT OR AD 76,000
(4) NCI in CI of Subsidiary 86,800
NCI (510,000 – 76,000) X 20% 86,800
 C CONSOLIDA
D
CORPORATIO ELIMINATIONS & TED
YEAR 2013 CORPORATION
N ADJUSTMENTS FIGURES

104,000 (2)
NET 76,000 (3)
1,100,000 510,000 1,343,200
INCOME 86,800 (4)

1,600,000 (1)
RETAINED 56,000 (2) 34,000 (1)
4,130,000 1,870,000 4,319,200
EARNINGS 76,000 (3) 70,000 (2)
(BEG) 52,800 (4)

104,000 (2)
NET 1,100,000 76,000 (3)
510,000 1,343,200
INCOME 86,800 (4)
 C CONSOLID
D
CORPORATI ELIMINATIONS & ATED
YEAR 2013 CORPORATION
ON ADJUSTMENTS FIGURES

DIVIDENDS
390,000 130,000 130,000 (2) 390,000
DECLARED

1,600,000 (1)
RETAINED 104,000 (2)
EARNINGS 76,000 (3) 34,000 (Year 1)
(END) 4,840,000 2,250,000 86,800 (4) 70,000 (Year 1) 5,272,400
56,000 (Year 1) 130,000 (2)
76,000 (Year 1)
52,800 (Year 1)

NCI 1,234,800 26,000 (2) 86,800 (4) 1,295,600

Another Computation…

Consolidated Net Income (2012):

900,000 Net Income Parent
340,000 Net Income Subsidiary
34,000 Gain on Acquisition
(56,000) Dividend Income (70,000 X 80%)
(76,000) Depreciation of Equipment (380,000 / 5 years)
1,142,000 Total Income (Parent & Subsidiary)
1,089,200 Total Income to Parent
Another Computation…

Consolidated Net Income (2013):

1,100,000 Net Income Parent
510,000 Net Income Subsidiary
(104,000) Dividend Income (70,000 X 80%)
(76,000) Depreciation of Equipment (380,000 / 5 years)
1,430,000 Total Income (Parent & Subsidiary) – No. 3
1,343,200 Total Income to Parent
Another Computation…

Consolidated Retained Earnings (2012 & 2013):

3,450,000 Retained Earnings (Beg)
1,089,200 Net Income of the Parent 2012
(220,000) Dividends declared Parent 2012
4,319,200 Retained Earnings (End of 2012)
1,343,200 Net Income of the Parent 2013
(390,000) Dividends declared Parent 2013
5,272,400 Retained Earnings (End of 2013) – Number 1
ANOTHER COMPUTATION…

340,000 Unadjusted Net Income Subsidiary 2012

(70,000) Dividends declared by Subsidiary
(76,000) Adjustment of Depreciation
194,000 Total Adjusted Income of the Subsidiary
X
80%
155,200 Number 2
Another Computation

Use the Entries to Answer Number 4

1,196,000 Eliminating Entry
(14,000) Share in Dividends 2012
52,800 Share in Net Income 2012
(26,000) Share in Dividends 2013
86,800 Share in Net Income 2013
1,295,600 Number 4
ACTIVITY
Solution (1)

105,000 net income of subsidiary

(12,000) depreciation of equipment
(24,000) impairment loss
69,000
X
20%
13,800 (B)
Solution (2)

285,000 net income of parent

105,000 net income of subsidiary
(12,000) depreciation
(24,000) impairment loss
354,000
(13,800) Income for the NCI
340,200 (A)
Solution (3)

1,560,000 R/E Parent Beg

340,200 Income accruing to Parent
(138,000) Dividends of the parent
1,762,200 (C)
Solution (4)

162,000 Initial Amount of NCI

13,800 Income accruing to the subsidiary
(9,000) Dividends of the subsidiary
166,800(C)
Number 5: Considered as Bonus Item
Number 6: Considered as Bonus item
Number 7: Not considered item
Number 8: Not considered item