As 21

1. ACCOUNTING STANDARD-21
CONSOLIDATED FINANCIAL
STATEMENTS
J.P., KAPUR & UBERAI

2. OBJECTIVEOBJECTIVE
To formulate principles and procedures for
preparation and presentation of consolidated
financial statements.
J.P., KAPUR & UBERAI

3. SCOPE
APPLICABLE TO FOLLOWING ENTERPRISES
 Group of enterprises under the control of a
parent.
 Investments in subsidiaries
EXCLUDED CASES
 Amalgamations
 Investments in associates
 Investments in joint ventures
J.P., KAPUR & UBERAI

4. DEFINITIONSDEFINITIONS
CONTROL:
More than one-half of the voting power of an
enterprise; or
Control of the composition of the Board of
Directors in the case of a company so as to
obtain economic benefits from its activities.
J.P., KAPUR & UBERAI

5. COMPOSITION OF CONSOLIDATED COMPOSITION OF CONSOLIDATED
FINANCIAL STATEMENTSFINANCIAL STATEMENTS
 Consolidated balance sheet,
 Consolidated statement of profit and loss,
 Notes, additional statements and
explanatory material that outline an essential part
thereof
NOTE:
The consolidated financial statements are presented, to
the extent possible, in the same format as adopted by the
parent for its separate financial statements.
J.P., KAPUR & UBERAI

6. SCOPE OF CONSOLIDATED FINANCIAL SCOPE OF CONSOLIDATED FINANCIAL
STATEMENTSSTATEMENTS
The consolidated financial statements are
compiled on the basis of financial statements
of PARENT and all enterprises that are
controlled by the parent.
The consolidated financial statement of a
parent organisation should encompass all the
subsidiaries, both domestic and foreign
companies.
Contd….
J.P., KAPUR & UBERAI

7. SCOPE OF CONSOLIDATED FINANCIAL SCOPE OF CONSOLIDATED FINANCIAL
STATEMENTSSTATEMENTS
However, the parent shall not include its subsidiaries
when:
1.Control is intended to be for a short-term & the
subsidiary is acquired with a view to its
subsequent disposal in the near future; or
2.it operates under severe long-term restrictions,
which significantly impair its ability to transfer
funds to the parent.
J.P., KAPUR & UBERAI

8. CONSOLIDATION PROCEDURESCONSOLIDATION PROCEDURES
BASIC PROCEDURE
The financial statements of the parent
and its subsidiaries should be combined
on a ONE-TO-ONE BASIS by grouping
together the like items of assets,
liabilities, income and expenses.
J.P., KAPUR & UBERAI

9. CONSOLIDATION PROCEDURESCONSOLIDATION PROCEDURES
OTHER PROCEDURE
The holding company should eliminate its cost of
investment in each of its subsidiaries
If cost of investment > holding’s share in equity
GOODWILL
If cost of investment < holding’s share in equity
CAPITAL RESERVE
contd….
J.P., KAPUR & UBERAI

10. CONSOLIDATION PROCEDURESCONSOLIDATION PROCEDURES
Minority interests in the net income should be
identified and adjusted against the income of the
group in order to arrive at the net income
attributable to the owners of the parent; and
Minority interests in the net assets should be
identified and presented in the consolidated
balance sheet separately from liabilities and the
equity of the parent's shareholders.
J.P., KAPUR & UBERAI

11. DISCLOSURESDISCLOSURES
The consolidated financial statements should
disclose by way of a note - all subsidiaries including
the name, country of incorporation or residence,
proportion of ownership interest
Intragroup balances and transactions and resulting
unrealised profits should be wholly discarded.
The financial statements used in the consolidation
should be drawn up to the same reporting date.
J.P., KAPUR & UBERAI

12. DISCLOSURESDISCLOSURES
The consolidated financial statements should disclose
the following wherever applicable:
a.the nature of the relationship between the parent
and a subsidiary,
b.the impact of the acquisition and disposal of
subsidiaries on the financial position
c.the names of the subsidiary of which reporting
date is different from that of the parent and the
difference in reporting dates.
J.P., KAPUR & UBERAI

13. DISCLOSURESDISCLOSURES
Minority interests should be presented in the
consolidated balance sheet separately from
liabilities and the equity of the parent's
shareholders.
Consolidated financial statements should be
prepared using uniform accounting policies. In
case such uniform accounting policies cannot be
incorporated in preparation of consolidated
financial statements the same shall be disclosed.
J.P., KAPUR & UBERAI