Features of the analysis of consolidated reporting essence. Consolidated reporting and features of its analysis. Preparation of reporting indicators of subsidiaries for the preparation of consolidated reporting

The consolidated balance sheet in its structure is practically no different from the original balance sheets of the parent organization and the subsidiary. This means that the sequence and methodology for analyzing a consolidated balance sheet is the same as analyzing a regular balance sheet.

A feature of the analysis of consolidated statements is that an analytical stage is added, during which it is necessary to explain what type of reporting consolidation was used, under what conditions the enterprises were merged into a group, and to characterize the economic relationship and interaction of group members. And, of course, it is necessary the financial analysis not only consolidated reporting, but also original forms financial statements parent organization and subsidiaries.

An explanatory note is attached to the consolidated balance sheet and profit and loss statement of the group's activities, which contains a list of all subsidiaries with disclosure of a number of data (names of companies, places of state registration or maintenance economic activity, the size of the authorized capital, the share of the main (dominant) participation in these companies or in their authorized capital).

The note also provides a cost estimate as of the reporting date of the impact of the acquisition or disposal of subsidiaries or affiliates on the financial position of the group and on the financial performance of the group for the reporting period.

In the explanatory note to the consolidated financial statements, the parent organization also provides a breakdown of its investments in the context of each dependent company (in the section on financial investments):

Information about the name of the dependent company,

His legal address,

The amount of authorized capital,

The share of the parent organization in the total amount of the contribution, as well as a statement of intentions for further participation.

The explanatory note to the consolidated statements also contains explanations of those cases when the indicators of subsidiaries and dependent companies are reflected in the consolidated financial statements directly as financial investments, to which the considered principles and rules of consolidation do not apply.

Summarizing all of the above, it can be argued that the Consolidated Reports have some features:

Consolidated financial statements are not the financial statements of a legally independent enterprise. Its purpose is to obtain an overview of the performance of the corporate family. It has a clear informational and analytical focus;

The results of transactions between members of a corporate family are not included in the consolidated financial statements. It shows only assets and liabilities, income and expenses from transactions with external counterparties. Any intra-group financial and business transactions are identified and eliminated during the consolidation process. Consolidation is not a simple summation of items of the same name financial statements group companies;

Group reports contain summary information on the performance and financial position of each company included in the association. This means that the profits of one subsidiary may “hide” the losses of another, and the strong financial position of one subsidiary may “hide” the potential insolvency of another;

If a group consists of companies operating in different types of businesses, the consolidated financial statements for the group may not disclose certain important details when additional information about each segment of the group's activities is not available. The formulated features of consolidated reporting allow us to fully disclose its role in the group’s activities:

Provide general information on the group as a whole to maintain positive images of the group and strengthen positions in the stock market (increase in stock prices of the parent company and other companies of the group);

Provide a more realistic picture of the business operations and financial position of a single economic unit, but do not replace individual financial statements;

Provide a basis for making management decisions;

Characterize the economic relationship and interaction of group members;

Perform a supervisory function for the parent company, since these reports are prepared in the currency of the parent company;

Influence the financing and financial planning of the group’s activities, etc.

For external users, consolidated financial statements provide additional information that overcomes the limitations of private balance sheets. For the parent company, consolidated reporting serves as a kind of “extension” and “supplement” to its reporting.

During the analysis process, it should be taken into account that in order to avoid repeated counting and artificial inflation of capital and financial results, items reflecting mutual intra-company transactions should be eliminated.

Items subject to elimination are those that are eliminated from the consolidated statements because they result in restatement and misstatement of the financial profile of the group.

When preparing consolidated financial statements, the following calculations are subject to elimination:

o debt on contributions not yet made to the authorized capital;
o advances received or issued;
o loans from companies included in the group;
o mutual receivables and payables of group companies;
o other assets and securities;
o expenses and income of future periods;
o unexpected operations.

If the amounts of receivables of one company fully correspond to the amounts of accounts payable of another company included in the group, then they are mutually eliminated.

When assessing financial condition, various methods and techniques are used:

o vertical analysis, in which the structure of the final financial indicators is determined, identifying the impact of each reporting item on the result as a whole;
o analysis of relative indicators, in which the relationships between individual report items are calculated and the relationships between the indicators are determined;
o a comparison method, which involves establishing similarities and differences between indicators, subject to the interconnectedness of the values being compared, homogeneity and the same methodology for their determination.

The sequence and methodology for analyzing the consolidated balance sheet are similar to the analysis of a regular balance sheet. It is necessary to explain what type of reporting consolidation was used, under what conditions the enterprises were merged into a group, and to characterize the relationship and interaction of group members. Financial analysis should be carried out not only of the consolidated statements, but also of the original forms of financial statements of the parent organization and subsidiaries. In the process of analysis, the share of the parent organization and subsidiaries in the property of the financial and industrial group is determined, and the share of participation of subsidiaries in the assets of the group is assessed. Calculate the share of own and borrowed funds of the parent organization and subsidiaries in the sources of formation of the property of the financial and industrial group, evaluate the share of participation of subsidiaries in the sources of formation of the group’s property.

When preparing a profit and loss statement, the financial results of the merging companies and their presentation will depend on the method of association - purchase or merger.

The income statement presents the minority interest in the profits (losses) of subsidiaries. This indicator is used to adjust financial result(profit or loss) of the group to determine the net profit attributable to the parent company.

The value of a company formed as a result of the merger of two enterprises very often exceeds the total value of these two enterprises. As a result of the merger of enterprises, economies of scale arise - a decrease in average costs with an increase in the scale of production. Information about a business merger can (and should) lead to an increase in the price of shares, since the purpose of any merger is to maximize returns to the shareholders of the merging companies.

An indicator such as earnings per share is taken into account in mergers of enterprises for which growth in the short term is important, and the assessment of long-term trends is not necessary. When assessing the long term, discounting must be used.

The explanatory note to the consolidated balance sheet and profit and loss statement contains a list of all subsidiaries with disclosure of a number of data (names of companies, place of state registration or business activity, amount of authorized capital, share of the main (dominant) share in these companies or in their authorized capital).

Many small and large companies are constantly looking to expand and diversify their activities by merging with one or more companies. There are many reasons for this combination, in particular:

o providing the administration of the acquiring company with the opportunity to actively exploit the historically established production mechanism and effective sales schemes of the acquired company;
o providing the company initiating this merger with a new composition of suppliers and buyers, additional production resources, including qualified production personnel and a group of qualified managers, as well as using already existing relationships with consumers and government authorities and extra-budgetary funds in the local area for the benefit of the new association;
o belonging of the company being sold directly or indirectly to the industry targeted by the diversification processes of the initiator of the merger;
o modification organizational structure market, competition remains unchanged;
o external expansion is much more attractive and quite effective compared to progressive internal expansion;
o the psychology of scale, which lies in the fact that a large company attracts partners to joint activities, and therefore revives business activity and ultimately improves the performance of the combined company;
o reduction of financial risk: if one of the group’s enterprises is ineffective and unprofitable, then all losses will be covered by the owners and creditors of this subsidiary, i.e. the enterprise, not the group, bears responsibility for the obligations;
o economic reasons due to significant differences in legal systems, taxation and requirements for the activities of companies in different countries of the region, as well as the advisability of more efficiently carrying out activities through companies that have a legal dependence;
o overcoming customs and tax barriers, trade restrictions, bans, etc.

It should be noted that the merger of companies in a developed market economy is an ongoing process. By planning a policy for managing their investments, enterprises seeking to unite into consolidated groups have the opportunity to prepare, evaluate and implement the most effective investment projects and programs.

The analysis of information presented by financial statements is largely determined by the features of its formation and final synthesis. Holding-type corporate structures, consisting of parent companies and their numerous subsidiaries, play a significant role in the domestic economy. In addition to the individual reporting of each member of a group of consolidated enterprises, such economic entities are also required to submit consolidated reporting for the group as a whole.

Consolidated statements are focused on reflecting the true state of affairs in relation to profits, assets and liabilities, when one company has controlling stakes in the authorized capitals of other enterprises and controls their activities. The principles for preparing consolidated statements are radically different from the methods for preparing regular statements, and this circumstance must be taken into account during the analysis.

Purpose of consolidated financial statements consists of providing shareholders, creditors, potential investors, business partners of the parent company with the results of operations and financial position of the entire group of consolidated enterprises, including subsidiaries, as if they constituted one enterprise carrying out one or more types of activities. It is compiled on the basis of reporting data from group members using special accounting and analytical procedures. Therefore, the formation of consolidated reporting requires not only a mechanical summary of reporting indicators, but also the use of special accounting and settlement actions and techniques.

In accordance with Federal Law No. 208-FZ dated July 27, 2010 “On Consolidated Financial Reporting” (hereinafter referred to as the Law on Consolidated Financial Reporting), such reporting must be prepared according to the principles provided for in International Financial Reporting Standards. Therefore, when analyzing consolidated financial statements, these principles must be taken into account. Here are some of them :

1) shares purchased from a subsidiary are reflected in the balance sheet of the parent company at the cost of acquisition, and the share in the equity capital of the subsidiary is reflected at the book value of the contributed assets;
2) the assets and liabilities of the subsidiary must be revalued at the time of consolidation at their current (market) value (a revaluation reserve is created for this purpose);
3) the positive difference between the offer (the value of the shares offered as payment or the value of the contributed property) and the amount of the net assets of the subsidiary during consolidation is capitalized, considered as positive goodwill and taken into account as part of intangible assets; the negative difference (negative goodwill) is reflected in acquisition reserves;
4) mutual debt (both receivables and creditors) between enterprises of the consolidated group is excluded from the consolidated balance sheet.

In order to prevent double reporting on the consolidated balance sheet of funds or accounts payable, balances on the accounts of the enterprises of the consolidated group that arose as a result of mutual settlements should be excluded. For this purpose, before drawing up the opening consolidated balance sheet, a detailed mutual reconciliation of receivables and payables between the group's enterprises and offset of mutual claims are carried out.

First of all, it is necessary to transfer receivables and payables between the newly acquired enterprise and the companies of the consolidated group, reflected in accounts 60, 76, 64, 62, etc., to account 78 “Settlements with subsidiaries (dependent) companies” and draw up a transformation table of mutual debt. Using this table, offsets are carried out for transactions of the same name on accounts receivable and accounts payable, and if discrepancies are identified, adjusting accounting entries are made both for the consolidated balance sheet and for the balance sheets of individual enterprises of the group.

In this case, special attention should be paid to the balance sheet valuation of assets transferred and accepted by enterprises of the consolidated group. Until the registration of the consolidated group, the enterprises carried out and formalized their relationships by transferring assets to each other through the sales process and, accordingly, at market prices, taking into account the profits and taxes included in them. Since, for accounting and tax purposes, the consolidated enterprises of the group must represent a single whole, profits and taxes included in transfer prices are relevant only for intra-group accounting and the distribution of payments among them and should be excluded from the consolidated statements. Accordingly, the following comes into force fundamental provisions of the consolidated statements.

Settlement balances for intra-group assets sold and underlying unrealized profits from such transactions should be eliminated in their entirety. Unrealized losses from intra-group transactions should also be eliminated.

At the time of inclusion of a subsidiary in the consolidated group, it is necessary to reconcile the balance sheet valuation of the parent company’s long-term financial investments in an amount corresponding to the share of the subsidiary’s capital and reserves. To do this, it is necessary: in account 84 “Retained earnings” and in the statement of financial results of the consolidated group, instead of the dividends received by the parent company, show the corresponding share of the profit of the consolidated enterprises, which will allow to exclude from the consolidated statements the double reflection of profit during linear consolidation of accounts.

Thus, when adding linearly the balances on the accounting accounts of the parent and subsidiary companies, the double account in account 84 “Retained earnings” will be eliminated, since the credit balance on it will be reduced in the accounting of the subsidiary and at the same time the credit balance on the account will increase by the same amount 84 from the parent company. At the same time, there is an increase in assets from the parent company and a decrease in assets from the subsidiary, although this will not be reflected on the consolidated balance sheet, since the receipt of funds from the debit of account 51 “Current Account” from the parent company is offset by a decrease in funds from the credit of account 51 from the subsidiary.

The following provision of consolidated accounting and reporting follows from this.

The amount of dividends received by the parent company in the current financial year should be shown in the consolidated financial statements as part of the profit of the consolidated group. In the consolidated balance sheet and income statement, only dividends paid to third-party (in relation to the consolidated group) participants should be separately reflected (debit to account 84 “Retained earnings” and credit to account 75 “Settlements with founders”).

In the balance sheet of the parent company, long-term financial investments in the subsidiary should be assessed at cost plus the corresponding share of retained earnings from previous years of this enterprise until the moment of its acquisition. As a result, it turns out that the value of long-term financial investments increases by the amount of retained earnings from previous years, since an increase in retained earnings is an indicator of an increase in the value of assets. Conversely, losses of an associate reduce the value of the investment.

Only the “minority interest” in the consolidated reserves will be reflected in the consolidated financial statements, i.e. dividends belonging to founders external to the consolidated group. In other words, all prior earnings of the subsidiary at the time of consolidation must be distributed. The current year profit of the subsidiary, owned by the parent company, will be reflected in the balance sheet of the parent company as dividends received.

Retained earnings of the reporting year, reflected on the balance sheet of the subsidiary at the time of consolidation, belonging in the form of dividends to the parent company, are shown in the consolidated balance sheet and income statement as part of the retained earnings of the consolidated group. The consolidated statements reflect only the retained earnings of the subsidiary in the form of dividends owned by third-party founders as a “minority interest” in reserves.

When consolidating enterprises, accounts receivable from some enterprises of the group and accounts payable from other group members may arise simultaneously to the same third-party legal entity. This may lead to an increase in the currency of the consolidated balance sheet, i.e. distortion of his reality. Therefore, before drawing up a consolidated balance sheet, it is necessary to reconcile receivables and payables and, after appropriate registration of offsets, exclude such debt from the consolidated balance sheet.

When consolidating enterprises, receivables and payables to the same third-party (in relation to the consolidated group) legal entity are excluded from the consolidated balance sheet by the same amount.

Consolidated statements show what an organization's statements would be like if it closed all of its subsidiaries and managed them directly under one legal entity.

Consolidated financial statements include, in addition to the balance sheet, a consolidated income statement.

Consolidated financial statements are addressed to the management and supervisory boards of enterprises included in the corporate family, founders, as well as external consumers of information, such as existing and potential investors, creditors, suppliers, buyers, and the state. Thus, it turns out to be closed on the information function. For external users, it acts as additional information that eliminates the limitations of private balances. For the parent company, consolidated reporting is a kind of “extension” and “addition” to its reporting.

Sequence of drawing up a consolidated report:

1. The book value of the equity capital of the subsidiary is determined as of the date of acquisition of shares by the parent organization being analyzed:

Authorized capital + Additional capital + Reserve capital + + Retained earnings from previous years.

2. The book value of the share of the equity capital of the subsidiary is calculated.

3. The amount of investment of the parent organization being analyzed in the subsidiary is compared with the book value of the acquired share of the equity capital of the subsidiary; the monetary value of the business reputation arising during consolidation is calculated.

4. Indicators under the item “Investments in subsidiaries” are completely excluded from the consolidated balance sheet of the group. In this case, part of the amount is eliminated with the book value of the share of the equity capital of the subsidiary purchased by the parent organization. Therefore, this part of the subsidiary's equity capital is not reflected in the consolidated balance sheet.

The remaining amount of investment in the subsidiary is reflected in the item “Business reputation of the enterprise” of the consolidated balance sheet.

5. The minority share is determined, which includes two components:

30% of the book value of the subsidiary's equity,

30% of the profit received by the subsidiary after the sale of its shares to the parent organization being analyzed, i.e. “after-sales” profit (of the reporting period). This amount is reflected in the consolidated balance sheet as a separate liability line.

6. The retained earnings of the reporting year of the parent organization are determined. In the consolidated balance sheet, the net profit of the reporting period is summed up with the net profit of the parent organization itself;

7. All other balance sheet items of both the parent organization being analyzed and the subsidiary are summed up

54. Procedures and principles for the preparation and presentation of consolidated financial statements

consolidation procedure covers calculations such as:

♦ capital consolidation;

♦ consolidation of balance sheet items related to intragroup settlements and transactions;

♦ consolidation of financial results (profit or loss) from intragroup sales of products (ra-

bot, services), as well as mutual volumes of sales of products (works, services) between the main and subsidiaries and corresponding costs;

♦ consolidation of other mutual (operating and non-operating) income and expenses within the group;

♦ the amount of dividends of the main and subsidiary companies.

1. The principle of completeness . All assets, liabilities, deferred expenses, deferred income of the consolidated group are accepted in full, regardless of the share of the parent company.

2. The principle of equity. Since the parent company and subsidiaries are treated as a single economic unit, equity is determined by the book value of the shares of the consolidated enterprises, as well as by the financial results of operations of these enterprises and reserves.

3. The principle of fair and reliable assessment . Consolidated accounts must be presented in a clear and easy-to-understand manner and give a true and fair view of the assets, liabilities, financial position and profits and losses of the entities in the group considered as a whole.

4. The principle of constancy in the use of consolidation and evaluation methods and the principle of a functioning enterprise. Consolidation methods should be applied for a long time, provided that the enterprise is functioning, i.e. does not intend to cease its activities in the foreseeable future. Deviations are permissible in exceptional cases, and they must be disclosed in appendices to the reporting with appropriate justification. These principles apply to both the forms and methods of preparing consolidated financial statements.

5. Principle of materiality . This principle provides for the disclosure of such items, the value of which may affect the adoption or change of decisions on the financial and economic activities of the company.

6. Unified assessment methods . The assets, liabilities, deferred expenses, profits and expenses of the consolidated company must be taken into account in their entirety. It is important that when consolidating, the assets and liabilities of the parent company and subsidiaries are valued using the same methodology used by the parent company.

7. Single date of compilation . Consolidated financial statements must be prepared as of the balance sheet date of the parent company.

The financial statements of subsidiaries must also be restated as of the consolidated financial statements date.

Most of the principles discussed above, on which consolidated reporting is based in accordance with international standards, are also reflected in Russian regulatory documents governing the preparation of consolidated financial statements.

When we use the term “reporting,” we consider the financial statements of an organization without delving into its organizational and economic structures. Modern large organizations can unite several enterprises with different systems of participation. Under one name there is not one enterprise, but a whole group of related enterprises. Organizations that have subsidiaries in their structure prepare consolidated statements, which in our country are called consolidated statements.

For a long time, “consolidation of reporting” was understood as an elementary summation of balance sheet items of enterprises included in a single economic complex. This carried with it the possibility of biased reflection in the consolidated financial statements of the performance indicators of the group of enterprises as a whole. Inaccuracies and misstatements may result from:

double accounting of funds contributed by the parent organization to the authorized capital of subsidiaries;
overstatement of the balance sheet currency due to the inclusion of intragroup debt in the balance sheet;
inclusion in financial results of profit received from intragroup sales, etc.

The summation method was used to compile consolidated reporting of Soviet enterprises. The basis for compiling consolidated reporting is state ownership of the means of production and the sectoral principle of vertical subordination of organizations. There were two methods for compiling it, namely: factory and industrial.

In fact, the concepts of “consolidated reporting” and “consolidated reporting” are not identical. Experts involved in consolidated reporting believe that using these two concepts as synonyms is incorrect, because these forms of reporting differ not only in purpose, preparation technique, range of users, but also conceptually. Summary reporting compiled within the framework of one owner or for statistical generalization of data, and consolidated- several owners of jointly controlled property.

In order No. 112 of the Ministry of Finance of Russia dated December 30, 1996 “On methodological recommendations on the preparation and presentation of consolidated financial statements" provides a detailed description of the general provisions of consolidated financial statements, the procedure for its preparation and presentation, rules for combining indicators of the financial statements of the parent organization and subsidiaries, rules for including data on dependent companies in the consolidated financial statements, and also developed rules for drawing up explanations for the consolidated balance sheet and consolidated profit and loss statement.

In particular, in order No. 112 consolidated reporting characterized as “a system of indicators reflecting the financial position as of the reporting date and financial results for the reporting period of a group of related organizations.”

When preparing consolidated financial statements, the goal is to eliminate (exclude) the influence of the above factors (distorting reporting data) on the performance indicators of the group as a whole. Achieving this goal is facilitated by the implementation of a whole range of measures. It should be noted that in countries with developed and highly integrated economies, where corporate groups have long existed, close attention is paid to these issues.

For the first time in world practice, American companies used consolidation and published a consolidated report at the very beginning of the 20th century. This was caused by the large scale of concentration and centralization of capital, the emergence of holdings and concerns. The first company to publish consolidated financial statements was the United States Steel Company.

Later, consolidated reporting began to be compiled in European countries. This happened in the late 40s of the 20th century. In UK legislation, the first mention of consolidated reporting dates back to 1947, in West Germany - to 1965, and in France - to 1986. However, the first publications on this issue appeared in the UK back in the 20s. The London Stock Exchange began requiring consolidated accounts in 1939. Only 22 French companies published consolidated balance sheets in 1967, but it was not until 1986 that such publication requirements became mandatory in France. In Germany, financial consolidation has only been mandatory since 1990 if the following conditions exist:

majority of votes;
personal influence providing control;
contract control;
control based on constituent documents - the emphasis is on actual control.

Consolidated reporting is even less common in other European countries - Spain, Italy, Greece.

The emergence of transnational corporations with a high share of foreign assets, export operations and labor force abroad, the creation of enterprises with the participation of foreign capital, the emergence of various forms of commercial, industrial, and financial ties between companies required the provision of information about their activities in the form of consolidated statements.

The theory and practice of preparing consolidated statements in different countries differ significantly in the following main points:

uneven distribution of consolidated financial statements;
different approaches to understanding the category “group of companies” from the point of view of consolidation;
uneven amounts of information published by companies;
different methods of consolidation.

The general idea of consolidation is very simple in essence. There is a group of enterprises that are interconnected economically and financially, but are independent legal entities. Consolidated financial statements must be prepared to provide an overview of the financial position and performance of the group as a whole. Moreover, each legally independent enterprise that is part of a corporate group is required to maintain its own accounting records and document its results in the form of its own financial statements.

When analyzing the activities of groups, their private balance sheets do not provide a comprehensive picture of the overall performance results, since they are limited and lose their analytical capabilities. There is a need for fundamentally different information, which is generated as a result of the preparation of consolidated financial statements. Its task is to reflect the actual picture of the property, financial situation and results of economic activity of a group of legally independent enterprises, which are considered as one economic community.

Thus, consolidated financial statements are a combination, using special accounting procedures (rather than simple summation), of the reporting of two or more enterprises that are in certain legal and financial-economic relationships, when one or more legally independent enterprises are under the control of only one company - the so-called parent (parent) society, standing above all other members of the group .

Consolidated statements show what an organization's statements would be like if it closed all of its subsidiaries and managed them directly under one legal entity.

Issues regarding the preparation, structure and purpose of consolidated statements are reflected in several International Financial Reporting Standards (IAS). In particular, the most important standards on the issues of consolidated reporting are: 22 “Business Combinations” (IAS 22 “Business Combinations”); 25 “Accounting for Investments” (IAS 25 “Accounting for Investments”); 27 “Consolidated financial statements and accounting for investments in subsidiaries" (IAS 27 "Consolidated Financial Statements and Accounting for Investments in Subsidiaries"); 28 "Accounting for investments in associated enterprises" (IAS 28 "Accounting for Investmens in Associates"), 31 "Financial reporting of participation in joint ventures" ( IAS 31 “Financial Reporting of Interests in Joint Ventures”).

One of the most complex standards, without which understanding the procedure for preparing consolidated financial statements is extremely difficult, is IFRS 22 “Business Combinations”. The purpose of this standard is to describe methodological accounting issues in business combinations. It examines examples of the acquisition of one enterprise by another, as well as situations where it is impossible to determine the purchasing enterprise. The same standard addresses the issues of determining the cost of acquisition, its distribution between the acquired identifiable assets and liabilities of the enterprise, the problem of accounting for emerging positive or negative business reputation, and its further depreciation. Equally important is the determination of the minority share in the capital of the group.

International financial reporting standards provide all the basic definitions of various concepts that are in one way or another related to consolidated reporting.

Consolidation is a generalization of the commercial and financial results of a group of enterprises considered as a single economic unit.

Group (corporation)- an association of enterprises (companies) that is not a legal entity and consists of a holding (parent) company and all its subsidiaries, which in turn are legal entities.

Parent company (holding company, main company)- the holder of a controlling stake in subsidiaries or other enterprises, controls the activities of one or more subsidiaries. Required to prepare summary (consolidated) financial statements.

Controlling stake(more than 50% of ordinary shares at par value with voting rights) ensures resolution of issues of distribution of income, appointment of all or a majority of members of the management board or board of directors of a controlled enterprise. The parent enterprise, together with its subsidiaries and other enterprises, forms a group and has the right and ability to derive economic benefits from the subsidiaries. The concept of a parent enterprise is based on the existence of legal control.

Subsidiary company (company) is recognized as such if another company, called the parent, as a result of a dominant participation in its authorized capital, or in accordance with an agreement between them, or otherwise exercises existing control over its activities, has the ability to determine the decisions taken by such company.

Consolidated financial statements compiled by the parent company for the entire set of controlled companies (enterprises) and reflects the financial position and results of economic activities of all companies included in the scope of consolidation as a single economic whole. Consolidated financial statements are necessary for everyone who has interests or intends to have them in a given group of companies: investors, creditors, suppliers and customers, staff and trade unions, banks and others financial institutions, government agencies and local authorities.

Group (sphere) of consolidation- the parent company with all its subsidiaries. The set of companies for which consolidated financial statements should be prepared.

Consolidated balance- consolidated balance sheet of all companies included in this area of consolidation. Component of consolidated financial statements. The assets, liabilities and equity of a subsidiary are included in the consolidated balance sheet from the date on which control of the acquired subsidiary effectively passes to the acquirer, when it becomes able to control the financial and operating policies of the acquired subsidiary.

Consolidated income statement includes the results of financial and economic activities of all companies included in this area of consolidation. This required element consolidated financial statements.

The results of a subsidiary are included in the consolidated statement of operations from the date the company is acquired and recognized as a subsidiary.

The results of a subsidiary that ceases to be a subsidiary (for example, as a result of a sale) are included in the consolidated income statement until the date on which the parent ceases to have existing control over it. The difference between the proceeds from the sale of a subsidiary and the carrying amount of its net assets at the date of sale is recognized in the consolidated income statement for the corresponding reporting period.

Consolidated financial statements- financial statements of the group presented as a single economic organization.

Control of financial and economic activities- the right of a company to establish the principles of financial and production (commercial) activities of another company in order to obtain benefits from it.

Control is considered to exist when the parent company owns, directly or through a subsidiary, more than half of the voting shares of the controlled entity, and also when, with a smaller number of shares, the controlling company has:

a) the ability to dispose, by agreement with other investors, of more than half of the votes;

b) the ability to determine the principles of the company’s activities, enshrined in its charter or in a special agreement;

c) the right to appoint and remove a majority of members of the board of directors or other similar management body of the company;

Thus, unconditional control presupposes the holding company owning more than 50% of the subsidiary's ordinary shares, indirect control - with a smaller share of participation with the possibility of additional influence.

Joint control- control of the activities of an enterprise (company) subject to consolidation, carried out jointly by two or more other companies.

Merger of companies- the combination of independent enterprises into a single economic unit as a result of a merger or as a result of the acquisition of control by one enterprise over the net assets and production activities of another enterprise.

Purchase (acquisition)- a business combination in which one of the enterprises, called the acquirer, gains control of the net assets and operations of another enterprise acquired in exchange for the transfer of assets, the assumption of liabilities or the issue of shares.

Merger or consolidation of capital shares- a business combination in which the shareholders of the combined enterprises exercise control over all or substantially all of the common net assets and operating activities to jointly share the risk and profits of the combined enterprises, so that neither party can be identified as an acquirer.

Control is the power that allows you to manage the financial and production activities of an enterprise in order to make a profit.

Minority share (share of minority shareholders), owning less than 50% of the shares is the portion of the net results of operations and net assets of a subsidiary attributable to the share that the parent does not own directly or indirectly through subsidiaries. IFRS 27 specifically states that minority interest is shown separately from the parent company's liabilities and equity in the consolidated balance sheet. The minority interest in the profits of the consolidated group of companies is presented separately in the consolidated income statement.

fair value- the amount at which an asset can be exchanged or a liability repaid by interested knowledgeable parties in an upcoming transaction.

Date of purchase (purchase)- the date of establishment of control over the net assets and production activities of the acquired enterprise.

Russian legislation also reflects issues related to the definition of certain concepts and terms of consolidated reporting.

In accordance with Art. 105 of the Civil Code of the Russian Federation, a business company is recognized as a subsidiary if another (main) business company or partnership, due to a predominant participation in its authorized capital, or in accordance with an agreement concluded between them, or otherwise has the opportunity to determine the decisions made by such company. The subsidiary is not liable for the debts of the parent company (partnership). The parent company (partnership), which has the right to give mandatory instructions to the subsidiary, is jointly and severally liable with the subsidiary for transactions concluded by the latter in pursuance of such instructions. In case of insolvency of a subsidiary due to the fault of the main company (partnership), the latter bears subsidiary liability for its debts.

In Art. 106 of the Civil Code of the Russian Federation provides a definition of a dependent business company, which is recognized as such if another (dominant, participating) company has more than 20% of the voting shares of a joint-stock company or 20% of the authorized capital of a limited liability company. Only a joint stock company and a limited liability company can be either dependent or dominant. The limits of mutual participation of business companies in each other's authorized capital and the number of votes that one of such companies can use at the general meeting of participants or shareholders of another company are determined by law.

In addition, the State Committee Russian Federation on antimonopoly policy and support of new economic structures (SCAP Russia) in the annex to the order of November 13, 1995 No. 145 “On approval and submission for registration of the Regulations on the procedure for submitting petitions and notifications to the antimonopoly authorities in accordance with the requirements of Articles 17 and 18 of the Law of the Russian Federation “On competition and restriction of monopolistic activities in commodity markets” provides definitions that specify the articles of the Civil Code of the Russian Federation.

A group of persons is a collection of legal entities or legal entities and individuals, in relation to which one or more conditions are met:

a person or several persons jointly, as a result of an agreement (concerted actions), have the right to directly or indirectly dispose (including on the basis of purchase and sale agreements, trust management, agreements on joint activities, commissions or other transactions) more than 50% of the total number of votes, attributable to shares (contributions, shares) constituting the authorized (share) capital of a legal entity. Indirect disposal of votes of a legal entity means the possibility of actual disposal of them through third parties in relation to whom the first person has the specified right or authority;
an agreement has been concluded between two or more persons who are given the right to determine the terms of entrepreneurial activity one or more parties to the agreement or other persons or perform the functions of their executive body;
a person has the right to appoint more than 50% of the executive body and (or) board of directors (supervisory board) of a legal entity;
the same individuals represent more than 50% of the executive body and (or) board of directors (supervisory board) of two or more legal entities.

Direct control is interpreted as the ability of a legal entity or individual to determine decisions made by a legal entity through one or more actions:

orders, including jointly with other persons as a result of an agreement (concerted actions), of more than 50% of the total number of votes attributable to shares (contributions, shares) constituting the authorized (share) capital of a legal entity;
obtaining the right to determine, including jointly with other persons, the conditions for conducting business activities of a legal entity or to exercise the functions of its executive body;
obtaining the right to appoint more than 50% of the executive body and (or) board of directors (supervisory board) of a legal entity;
participation together with the same individuals in the executive body and (or) board of directors (supervisory board) of two or more legal entities with representation of more than 50% of the composition of their management body.

Indirect control is considered as the ability of a legal or natural person to determine decisions made by a legal entity through third parties in relation to whom the former has one or more rights or powers:

dispose, including jointly with other persons as a result of an agreement (concerted actions), more than 50% of the total number of votes attributable to shares (contributions, shares) constituting the authorized (share) capital of a legal entity;
determine, including jointly with other persons, the conditions for conducting business activities of a legal entity or perform the functions of its executive body;
appoint more than 50% of the executive body and (or) board of directors (supervisory board) of a legal entity;
participate jointly with the same individuals in the executive body and (or) board of directors (supervisory board) of two or more legal entities, representing more than 50% of the composition of their management body.

A member of a group of persons is a legal entity or individual directly or indirectly controlling another legal entity or directly or indirectly controlled by another person.

Members of one group of persons are:

persons who directly or indirectly control one legal entity, including that legal entity;
persons controlled by the persons specified in the previous paragraph.

The definition of control established in modern Russian legislation is key in determining whether consolidated financial statements need to be prepared. It is quite close to the definition of control in foreign countries.

At the same time, in Russian legislation there is no concept of a parent company, the equivalent of which in the Civil Code of the Russian Federation is in some cases main society(partnership), and in others - dominant society or central company in financial and industrial groups.

The Russian definition of a subsidiary is, in essence, quite similar to the definition given in international standards, and Russian dependent companies can be called an analogue of British associated or related companies, the definition of which is contained in international standards.

Other issues related to the preparation of consolidated reporting are supplemented and specified in Federal law dated November 30, 1995 No. 190-FZ “On financial and industrial groups.”

In this Law financial and industrial group (FIG) is defined as a set of legal entities acting as main and subsidiary companies or who have fully or partially combined their tangible and intangible assets (participation system), on the basis of an agreement on the creation of financial industrial groups for the purpose of technological or economic integration for the implementation of investment and other projects and programs aimed to increase competitiveness and expand markets for goods and services, increase production efficiency, and create new jobs.

The FIG acts on behalf of the participants of the FIG in relations related to the creation and activities of the FIG; maintains summary (consolidated) accounting, reporting and balance sheet of financial industrial groups; prepares an annual report on the group's activities.

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Table 9.1

Method of inclusion of data groups of subsidiaries and dependent companies in consolidated reporting

Type of subsidiary company and type of investment	The degree of influence of the parent (main) company	Method of inclusion in consolidated financial statements
1. Subsidiary company (if the parent organization has more than 50% of the voting shares of the JSC or more than 50% of the authorized capital of the LLC)	Decisive influence full control	Full consolidation
2. Joint society	Shared control and influence	Proportional consolidation method (quota consolidation)
3. Dependent company (if the parent organization has from 20 to 50% of the voting shares of a joint stock company or from 20 to 50% of the authorized capital of an LLC)	Significant influence	Method of consolidating a share in capital
Financial investments in the capital of the parent company (one-time	Long-term relationships in the absence of significant influence or the presence of influence in connection with the acquisition of a share in the company for the purpose of sale	General procedure for financial investments

We found out why consolidated statements are prepared. But the answer to the question: “For whom are consolidated statements prepared?” also plays an important role. The need for consolidated reporting is primarily determined by the needs of its consumers. Consumers of consolidated reporting information include:

shareholders of the parent company and subsidiaries;
external investors;
creditors;
group management staff;
management and supervisory board of the parent company and subsidiaries;
government authorities;
buyers;
suppliers;
analysts and consultants;
business community and the public.

When preparing consolidated financial statements, the reporting data of the parent company and subsidiaries are combined in stages to present them as a single business organization. For these purposes, the reporting items of the group companies are first summarized item by item, and then mutual investments and transactions are excluded.

Consolidation should ensure the exclusion of repeated accounting of mutual transactions of group companies.

When preparing consolidated financial statements, the parent organization and subsidiaries must use a unified accounting policy regarding the assessment of similar items of property and liabilities, income and expenses, etc.

Consolidated financial statements combine the financial statements of the parent organization and subsidiaries, compiled for the same reporting period and on the same reporting date.

The organization must draw up consolidated financial statements in the volume and manner established by the Regulations on accounting“Accounting statements of an organization” (PBU 4/99), according to forms developed by the parent organization based on standard forms of accounting statements. Wherein

financial reporting forms can be supplemented with data necessary for users of consolidated financial statements;
articles (lines) of financial reporting forms for which the group does not have indicators may not be given, except in cases where the corresponding indicators were obtained in the period preceding the reporting period;
numerical indicators about individual assets, liabilities and business transactions should be presented separately in the consolidated financial statements if, without knowledge of them, it is impossible for users to assess the financial position of the group or the financial result of its activities. Numerical indicators for individual types of assets, liabilities and business transactions are not presented in the consolidated balance sheet or consolidated income statement, if each of these indicators individually is not significant for users to assess the financial position of the group or the financial result of its activities, but are reflected in a total amount in the notes to the consolidated balance sheet and consolidated income statement.

The parent organization adheres to the accepted form of the consolidated balance sheet, consolidated income statement and explanations thereof from one reporting period to another. Changes in selected forms of the consolidated balance sheet, consolidated income statement and explanations thereto are disclosed in the explanations to these reporting forms, indicating the reasons that caused this change.

The volume and procedure, including the deadlines for submitting the financial statements of subsidiaries and affiliates of the parent organization (including additional information necessary for the preparation of consolidated financial statements), are established by the parent organization.

Before drawing up consolidated financial statements, it is necessary to reconcile and regulate all mutual settlements and other financial relationships of the parent organization and subsidiaries, as well as between subsidiaries.

The name of each component of the consolidated financial statements must contain the word “consolidated” and the name of the group.

Consolidated financial statements are presented to the founders (participants) of the parent organization, and to other interested users - in cases established by the legislation of the Russian Federation, or by decision of the parent organization.

It is advisable for the parent organization to prepare consolidated financial statements no later than June 30 of the year following the reporting year, unless otherwise established by the legislation of the Russian Federation or the constituent documents of this organization.

The consolidated financial statements are signed by the head and chief accountant (accountant) of the parent organization.

By decision of the group members, consolidated financial statements may be published as part of the published financial statements of the parent organization.

To the consolidated financial statements reports of enterprises that are, in principle, within the scope of consolidation, but are not of interest to the merger, are not included. These include:

companies over which control can be considered temporary. For example, a controlling stake in a subsidiary is acquired and owned by the parent company solely for the purpose of its subsequent sale in the near future;
subsidiaries operating under long-term insurmountable restrictions that deprive them of the ability (or significantly reduce it) to transfer cash at the expense of the parent company. For example, due to currency restrictions at foreign branches, “blocking” of bank accounts, etc.;
subsidiaries whose economic activities differ sharply from the nature of the activities of the main parent company, for example, a bank and industrial joint-stock company, trading and insurance companies.

Thus, the consolidation procedure covers calculations such as:

capital consolidation;
consolidation of balance sheet items related to intragroup settlements and transactions;
consolidation of financial results (profit or loss) from intra-group sales of products (works, services), as well as mutual volumes of sales of products (works, services) between the main and subsidiaries and related costs;
consolidation of other mutual (operating and non-operating) income and expenses within the group;
amounts of dividends of the main and subsidiary companies.

In accordance with international standards, consolidated reporting must be based on certain principles and methods (meet certain requirements).

The principle of completeness. All assets, liabilities, deferred expenses, deferred income of the consolidated group are accepted in full, regardless of the share of the parent company. The minority interest is shown in the balance sheet as a separate item under the appropriate heading.
The principle of equity. Since the parent company and subsidiaries are treated as a single economic unit, equity is determined by the book value of the shares of the consolidated enterprises, as well as by the financial results of operations of these enterprises and reserves.
The principle of fair and reliable assessment. Consolidated accounts must be presented in a clear and easy-to-understand manner and give a true and fair view of the assets, liabilities, financial position and profits and losses of the entities in the group considered as a whole.
The principle of constancy in the use of consolidation and evaluation methods and the principle of a functioning enterprise. Consolidation methods should be applied for a long time, provided that the enterprise is functioning, i.e. does not intend to cease its activities in the foreseeable future. Deviations are permissible in exceptional cases, and they must be disclosed in appendices to the reporting with appropriate justification. These principles apply to both the forms and methods of preparing consolidated financial statements.
The principle of materiality. This principle provides for the disclosure of such items, the value of which may affect the adoption or change of decisions on the financial and economic activities of the company.
Unified assessment methods. The assets, liabilities, deferred expenses, profits and expenses of the consolidated company must be taken into account in their entirety. It does not matter how they are presented in the current accounting and reporting of the enterprises included in the group, since the parent company does not impose a ban and does not implement selective accounting approaches. It is important that when consolidating, the assets and liabilities of the parent company and subsidiaries are valued using the same methodology used by the parent company. Valuation methods according to the legislation that the parent company complies with must be applied when preparing consolidated financial statements.
Single date of compilation. Consolidated financial statements must be prepared as of the balance sheet date of the parent company. The financial statements of subsidiaries must also be recalculated as of the date of the consolidated financial statements.

Most of the principles discussed above on which consolidated reporting is based according to international standards, is also reflected in Russian regulatory documents governing the preparation of consolidated financial statements.

Depending on the presence or absence of mutual transactions, the following stages of consolidation can be distinguished:

primary consolidation is made when preparing consolidated statements for the first time of previously independent enterprises and is associated with the acquisition of an investee enterprise;
subsequent consolidation is carried out when preparing consolidated statements of a group formed earlier and already carrying out mutual operations.

The techniques and methods for preparing consolidated financial statements vary from country to country.

Depending on the nature of the transaction when investing and establishing control, there are two methods for preparing primary consolidated statements:

method of purchase (acquisition);
merger (absorption) method.

These methods differ procedurally and have big influence on the aggregate financial results presented in the consolidated statements.

Independent enterprises can merge into a single economic unit. Combinations may result in the creation of a new entity taking control of the merging entities, the transfer of the net assets of one or more merging entities to another entity, or the dissolution of one or more merging entities.

The merger can be carried out by purchasing the net assets or shares of another enterprise.

The merger can also be carried out by merger. Although the requirements for a legal merger vary from country to country, it is usually a combination of two businesses in which:

the assets and liabilities of one enterprise are transferred to another enterprise and the first is liquidated;
the assets and liabilities of the two enterprises are combined into a new enterprise and the two old ones are liquidated.

Associations are of horizontal, vertical and conglomerate types.

Horizontal merger- when one enterprise merges with another and both of them belong to a single industry.

Vertical association- when enterprises located at different poles of the production process and interacting according to the scheme: “supplier-manufacturer-buyer” merge.

Conglomerate association- when a multi-industry association is created from multi-industry enterprises.

Combination transactions in which one of the merging entities acquires control of the other are considered purchases.

The purchase date is the date from which the buyer has the right to manage the financial and current policies of the acquired enterprise in order to benefit from its activities. In practice, this date is the date of the general meeting of shareholders that approves the transaction and makes the necessary changes to the constituent documents.

Control is deemed to be established when one of the merging entities acquires ownership of more than half of the voting power of the other merging entity, unless (in exceptional cases) it is clearly demonstrated that such ownership does not entail control.

Additional signs of control:

the right to more than half of the votes of another enterprise due to the existence of an agreement with other investors;
the right to direct the financial and production policies of another enterprise in accordance with the charter or agreement;
the right to appoint or replace a majority of the members of the board or equivalent governing body of another enterprise;
the right to cast a majority of votes at meetings of the board or equivalent management body of another enterprise.

If it is difficult to determine the purchasing company, you can be guided by additional indirect signs of purchase:

the ratio of the fair value of the merging enterprises (the larger enterprise is the buyer);
exchange of shares with voting rights for cash (in such cases, the paying enterprise is the buyer);
the opportunity to resolve the issue of selecting management personnel for another enterprise (in such cases, the dominant enterprise is the buyer).

Sometimes an enterprise acquires the shares of another enterprise, but as compensation issues enough of its own shares to give the right to larger number votes, so that control of the combined entities passes to the owners of the entity whose shares were originally acquired. This situation is called repurchase. Legally, an enterprise issuing shares can be considered a parent or successor enterprise whose shareholders receive control of the combined enterprises. In this case, it becomes the acquiring enterprise and receives voting or other rights. The enterprise issuing the shares is deemed to have been acquired by another enterprise; the latter is considered to be the buyer and the purchase method is applied to the assets and liabilities of the entity issuing the shares.

When the shareholders of the merging enterprises do not create a dominant partner, but join together on essentially equal terms with the aim of sharing control over all or substantially all of the assets and production activities, then we are talking about a merger. In addition, the administration of the merged enterprises participates in the management of the combined structure and, as a result, the shareholders of the enterprises jointly share the risks and benefits of such a structure. For example, the American automobile giant Chrysler and the German concern Daimler Benz merged into one company, Daimler Chrysler.

Essence of Merger is that the acquisition does not take place and the joint sharing of risks and profits continues, which would have existed before the merger of economic activities. During a merger, the business activities of the combined entities continue separately as before, although they are under common, joint control. Accordingly, only minimal changes occur when individual financial statements are combined.

There are strict requirements for a merger. In order for a transaction to be classified as a merger rather than an acquisition, 12 conditions must be met.

Any of the merging parties must not have been a subsidiary or division of the other merging entity for two years.
Each of the merging parties must be independent of the other merging enterprises.
The merger is carried out in the form of a single transaction in accordance with a special plan within one year after the adoption of such a plan.
On the consummation date of the plan of combination, one of the combining companies issues only shares of common stock with rights identical to those of the outstanding shares in exchange for substantially all of the voting common stock of the other entity. Their interest must be at least 90% of the common voting shares to be exchanged.
Neither of the merging parties, during the two years prior to the adoption of the plan of combination or between its adoption and completion, intends to make changes to the equity structure in order to affect the terms of the exchange, for example, through an additional issue of shares, their distribution to existing shareholders, an exchange or withdrawal from circulation.
The merging entities, after adoption of the plan and prior to completion of the plan, purchase ordinary shares of common stock for purposes other than the merger.
As a result of the share exchange, the interests of the holders of common shares remain the same.
Shareholders are not deprived of voting rights and their rights are not impaired during the term of the merger plan. Shareholders have the opportunity to exercise voting rights when receiving new shares.
The merger is adopted by vote on the date of completion of the merger plan; There is no provision for any unfulfilled conditions for the issue of shares.
The combined company does not, expressly or impliedly, agree to repurchase or retire all or any portion of its common stock for the purpose of affecting the combination.
The merged company does not enter into financial transactions to benefit former shareholders, for example, does not use shares issued for the merger as collateral for loans.
The combined company does not plan to dispose of a significant portion of its assets within two years of the combination, except in transactions customary for the combined entities or to eliminate duplication or excess capacity.

Because the merger creates a single entity, the combined entity adopts a single, consistent accounting policy. Therefore, the combined entity recognizes the assets, liabilities and equity of the combining entities at their existing carrying amounts, adjusted only to conform to the accounting policies of the combining entities and their application to all reporting periods presented.

For any business combinations, additional information should be provided in the financial statements:

names and descriptions of the merging enterprises;
accounting methods;
the effective date of the merger for accounting purposes;
information about the production activity that was decided to be liquidated.

When purchasing, you must provide the following information:

percentage of voting shares acquired;
the purchase price and the amount of purchase consideration paid or conditionally payable;
information about the nature and amount of the provision for restructuring and other closure expenses arising as a result of the acquisition and recognized at the acquisition date.

Financial statements should disclose:

methods of accounting for positive and negative business reputation, including for the depreciation period;
justification of the useful life of positive and negative business reputation or the amortization period for negative business reputation;
methods of calculating depreciation;
results of reconciliation of the residual value of positive and negative goodwill.

When merging, reporting must provide additional information regarding:

a description and number of shares issued, along with the percentage of each entity's voting shares exchanged to consolidate capital interests;
the amount of assets and liabilities contributed by each enterprise;
the sales revenue, other operating revenue, extraordinary items and net income or loss of each entity prior to the date of the combination that are included in the net income or loss reported in the financial statements of the combined entity.

Consolidated financial statements include, in addition to the balance sheet, a consolidated income statement. When preparing such a report, the financial results of the merging companies and their presentation will depend on the method of association - purchase or merger.

In the case of an acquisition, financial results are included in the consolidated income statement only from the date of acquisition, and in the case of a merger, for the entire financial year.

It should be noted that a merger is more preferable for enterprises seeking to maximize sales, profits, assets and minimize costs as a result of such a merger.

The next stage of consolidation - consolidation of reporting of enterprises that have worked for some time as part of the group - has a number of features.

When consolidating the statements of companies included in the group in subsequent periods of their activity, additional difficulties arise due to the need to eliminate items reflecting mutual intra-company transactions in order to avoid repeated calculations and artificially inflating the amount of capital and financial results.

Items subject to elimination- these are items that are excluded from the consolidated statements because they lead to re-accounting and distortion of the financial characteristics of the group's activities.

The group concept presupposes a special attitude towards transactions between companies within the group. Intracompany transactions are similar to transactions between divisions (departments) within a company. Such operations are carried out during trade transactions and settlements thereon, issuing loans, and receiving dividends. All such transactions should be eliminated in preparing the consolidated balance sheet and income statement, as should intercompany settlement balances.

When preparing consolidated financial statements, the following calculations are subject to elimination:

debt on contributions not yet made to the authorized capital;
advances received or issued;
loans from companies included in the group;
mutual receivables and payables of the group companies (since a single economic unit cannot have receivables or payables to itself);
other assets and securities;
expenses and income of future periods;
unforeseen operations.

If the amounts of receivables of one company fully correspond to the amounts of accounts payable of another company included in the group, then they are mutually eliminated.

In preparing subsequent consolidated statements of income, adjustments are made in four main areas:

elimination of interim results caused by intragroup sales;
depreciation of business reputation arising during the creation of the group;
amortization of the deviation between the fair value of assets and liabilities from their carrying amounts included in these items on initial consolidation;
allocation of a minority share in the results of operations of a subsidiary.

When investing less than 100% in the capital of the purchased enterprise, the so-called minority share. This is the interest of third party shareholders and should be reported separately from group equity in the consolidated financial statements.

Minority interests in the net assets of consolidated subsidiaries must be determined and separately presented on the consolidated balance sheet. The minority share in the profits (losses) of subsidiaries for the reporting period must be determined and separately presented in the Profit and Loss Statement. This measure is used to adjust the financial result (profit or loss) of the group to determine the net profit attributable to the parent company.

The minority share in the consolidated balance sheet is determined by calculation based on the amount of capital of the subsidiary as of the reporting date and the percentage of shares not owned by the parent organization in their total number. The amount of capital of a subsidiary is determined as the total of Section III “Capital and Reserves” of its balance sheet minus the articles “Social Sphere Fund” and “Targeted Financing and Revenues”.

In the consolidated balance sheet, the minority interest indicator is reflected in the total of Section III of the balance sheet. In the consolidated income statement, the minority interest reflects the amount of the financial result of the subsidiary that does not belong to the parent organization; this share is determined by calculation based on the amount of retained earnings or uncovered loss of the subsidiary for the reporting period and the percentage of voting shares not owned by the parent organization in their total number.

In the consolidated income statement, the minority interest indicator is shown as a separate item on the entry line; income and expenses are also highlighted as a separate item. The group's income and expenses in the consolidated statement are shown less the corresponding minority income and expenses.

If the indicator of the minority share in the losses of a subsidiary is greater than the indicator of the minority share in the capital of this company, then the amount of the reserve capital (if it is insufficient - additional, then authorized) of the subsidiary, included in the consolidated financial statements, is reduced by the amount of the difference.

An explanatory note is attached to the consolidated balance sheet and profit and loss statement of the group's activities, which contains a list of all subsidiaries with disclosure of a number of data (names of companies, place of state registration or business activity, amount of authorized capital, share of participation of the main (dominant) in these companies or in their authorized capital).

information about the name of the dependent company,
his legal address,
the amount of authorized capital,
the share of the parent organization in the total amount of the contribution, as well as a statement of intentions for further participation.

An example of compiling one of the options for a consolidated balance sheet is the diagram presented in Table 9.2. It examines the case when the analyzed organization acquired 70% of the ordinary shares of the Beta LLC enterprise; investments of the main company in the subsidiary amounted to 4,725 thousand rubles.

1. The book value of the equity capital of the subsidiary Beta LLC is determined as of the date of acquisition of shares by the parent organization being analyzed:

authorized capital + additional capital + reserve capital + retained earnings from previous years = 2915 + 940 + 1720 + 1025 = 6600 thousand rubles.

2. The book value of the share of equity capital of the subsidiary Beta is calculated:

0.70 x 6600 thousand rubles. = 4620 thousand rubles.

3. The amount of investment of the parent organization being analyzed in the subsidiary is compared with the book value of the acquired share of the equity capital of the subsidiary; The monetary value of business reputation arising during consolidation is calculated:

4725 thousand rubles. - 4620 thousand rubles. = 105 thousand rubles. This value is reflected in the asset of the consolidated balance sheet.

4. The indicators under the item “Investments in subsidiaries” in the amount of 4,725 thousand rubles are completely excluded from the consolidated balance sheet of the group.

At the same time, 4620 thousand rubles. are eliminated with the carrying amount of the equity share of the subsidiary acquired by the parent organization. Therefore, this part of the equity capital of the subsidiary Beta is not reflected in the consolidated balance sheet.

The remaining 105 thousand rubles. investments in a subsidiary are reflected in the item “Business reputation of the enterprise” of the consolidated balance sheet.

5. The minority share is determined, which includes two components:

30% of the book value of the subsidiary's equity, i.e. 0.30 x 6600 thousand rubles. = 1980 thousand rubles;

30% of the profit received by the subsidiary after the sale of its shares to the parent organization being analyzed, i.e. “after-sales” profit (reporting period) = 0.30 x 1130 = 339 thousand rubles.

Thus, the minority share is 1980 thousand rubles. + 339 thousand rubles. = 2319 thousand rubles. This amount is reflected in the consolidated balance sheet as a separate liability line.

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Table 9.2

Table for compiling a consolidated balance sheet

(thousand roubles.)

Balance sheet items	Parent company		Beta LLC (subsidiary)		Equity capital of a subsidiary owned by		Elimination		Consolidated balance
Balance sheet items	Assets	Passive	Assets	Passive	group (70%)	minority (30%)	Assets	Passive	Assets	Passive
1	2	3	4	5	6	7	8	9	10	11
1. Non-current assets:	129520		9830		-	-	105	4725	134730
1.1. Business reputation	0		0		-	-	105	-	105
1.2. Fixed assets	97532		8400		-	-	-	-	105932
1.3. Investments in subsidiaries	4725		0		-	-	-	4725	-
1.4. Other noncurrent assets	27263		1430		-	-	-	-	28693
2. Current assets	193099		10555		-	-	-	-	203654
Balance	322619	-	20385	-	-	-	-	-	338384	-
3. Capital and reserves:		135078		7730	-	-	-	-		135869
3.1. Authorized capital		65004		2915	2040,5	874,5		2040,5		65004
3.2. Extra capital		23942		940	658	282		658		23942
3.3. Reserve capital		14081		1720	1204	516		1204		14081
3.4. Retained earnings from previous years		16476		1025	717,5	307,5		717,5		16476
3.5. Retained earnings of the reporting period		15575		1130	791	339				16366
4. Minority share	-	-	-	-	-	-	-	-	-	2319
5. Other liabilities		187541		12655	-	-	-	-	-	200196
Balance	-	322619	-	20385	5411	2319	-	-	-	338384

6. The retained earnings of the reporting year of the parent organization are determined: 0.70 x 1130 thousand rubles. = 791 thousand rubles.

In the consolidated balance sheet, the net profit of the reporting period is summed up with the net profit of the parent organization itself: 791 thousand rubles. + 15575 thousand rubles. = 16366 thousand rubles.

7. All other balance sheet items of both the parent organization being analyzed and Beta LLC are summed up.

As can be seen from Table 9.2, the consolidated balance sheet in its structure is practically no different from the original balance sheets of the parent organization and the subsidiary. This means that the sequence and methodology for analyzing a consolidated balance sheet is the same as analyzing a regular balance sheet. A feature of the analysis of consolidated statements is that an analytical stage is added, during which it is necessary to explain what type of reporting consolidation was used, under what conditions the enterprises were merged into a group, and to characterize the economic relationship and interaction of group members. And, of course, a financial analysis is required not only of consolidated statements, but also of the original forms of financial statements of the parent organization and subsidiaries.

Summarizing all of the above, it can be argued that consolidated reporting has some features:

Consolidated financial statements are not the financial statements of a legally independent enterprise. Its purpose is to obtain an overview of the performance of the corporate family. It has a clear informational and analytical focus;
the results of transactions between members of a corporate family are not included in the consolidated financial statements. It shows only assets and liabilities, income and expenses from transactions with external counterparties. Any intra-group financial and business transactions are identified and eliminated during the consolidation process. Consolidation is not a simple summation of items of the same name in the financial statements of group companies;
Group reports contain summary information on the results of operations and financial position of each company included in the association. This means that the profits of one subsidiary may “hide” the losses of another, and the strong financial position of one subsidiary may “hide” the potential insolvency of another;
if the group consists of companies operating in various types business, the consolidated statements for a given group may not disclose certain important details when additional information about each segment of the group's activities is not available.

The formulated features of consolidated reporting allow us to fully disclose its role in the group’s activities:

provide general information on the group as a whole to maintain positive images of the group and strengthen positions in the stock market (increase in stock prices of the parent company and other companies of the group);
provide a more realistic picture of the business operations and financial position of a single economic unit, but do not replace individual financial statements;
provide a basis for making management decisions;
characterize the economic relationship and interaction of group members;
perform a control function for the parent company, since these reports are prepared in the currency of the parent company;
influence the financing and financial planning of the group’s activities, etc.

Chapter 9 Test Questions

State the reasons for the emergence of consolidated reporting.
What are the differences between the concepts of “consolidated statements” and “consolidated statements”?
Describe the basic concepts of consolidated reporting: “parent company”, “subsidiary company”, “consolidated financial statements”, “group (area) of consolidation”, “minority interest”.
State the criteria for including these subsidiaries and dependent companies in the consolidated statements.
Who can be classified as consumers of consolidated reporting information?
What are the principles for constructing consolidated statements?
State the procedure for preparing summary (consolidated) financial statements.
Describe the concepts of “primary consolidation” and “subsequent consolidation”.
What is the difference between horizontal, vertical and conglomerate types of business combinations?
What is the purchase method when merging companies into a group and how does it differ from the merger method?
What is the essence of the concept of “elimination” when preparing consolidated financial statements? What items and calculations are subject to elimination?
What are the features of an organization's consolidated reporting?