ACC20013 Lecture Notes - Lecture 6: Financial Statement, Share Capital, Retained Earnings
Document Summary
Lecture 6: consolidation: controlled entities and wholly owned subsidiaries. It is common for one entity to merge with or acquire other entities by acquiring an ownership interest. E. g. , p ltd purchases shares in s ltd. Reasons for merger/acquisition include: synergy, diversification/sharpening business focus, growth, supply chain, economies of scale, taxation, eliminate competition. Relevance, understandability, comparability: the accounting standard governing the preparation of consolidated financial statements is aasb 10/ifrs 10 consolidated financial statements, aasb 10/ifrs 10: Requires a parent to present consolidated financial statements. In aasb 10/ifrs 10, an investor is a reporting entity that potentially controls one or more entities; it may have an investment in the investee, but is not required to do so. In aasb 3/ifrs 3 appendix a, acquisition date is defined as the date on which the acquirer effectively obtains control of the acquiree. Consolidation based on control power so as to benefit" model. Controller must have some exposure to risks and rewards.
