Group accounts: Difference between revisions
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''Financial reporting''. | ''Financial reporting - accounting practices''. | ||
Group accounts are an example of the 'substance over form' principle in financial reporting. | |||
Some large businesses are organised as a single company. Other comparable businesses are structured as a group of companies, with a top holding company and other subsidiary companies. | |||
The | |||
If group accounts were not prepared, it would be very difficult to make appropriate comparisons. | |||
The purpose of group accounts is to report the results and financial position of the businesses in a way that makes them readily comparable, even though they have different legal structures. | |||
Consolidated group accounts report the activities of subsidiaries controlled by the holding company as part of the group's total activities. | |||
They also treat the assets and liabilities of the subsidiaries as assets and liabilities of the group. | |||
Appropriate proportionate interests in associated undertakings and joint ventures are also incorporated into the consolidated group accounts. | |||
Preparing consolidated group accounts involves two stages: | |||
#''Aggregation'' to add up the individual assets and liabilities of all of the companies in the group. | #''Aggregation'' to add up the individual assets and liabilities of all of the companies in the group. | ||
#''Consolidation adjustments'' to remove, for example, intercompany trading and indebtedness from the consolidated figures for the group. | #''Consolidation adjustments'' to remove, for example, intercompany trading and indebtedness from the consolidated figures for the group. | ||
The holding company of a group of companies is also sometimes known as the 'parent' company. | |||
Businesses which are organised under a single company, rather than a group of companies, are sometimes known as 'divisionalised'. | |||
(Their business units being a number of divisions, rather than a number of different companies.) | |||
| Line 16: | Line 38: | ||
* [[Aggregation]] | * [[Aggregation]] | ||
* [[Balance sheet exposure]] | * [[Balance sheet exposure]] | ||
* [[Consolidated]] | |||
* [[Consolidated group accounts]] | |||
* [[Consolidation]] | * [[Consolidation]] | ||
* [[Consolidation adjustments]] | * [[Consolidation adjustments]] | ||
| Line 21: | Line 45: | ||
* [[Group]] | * [[Group]] | ||
* [[Income statement exposure]] | * [[Income statement exposure]] | ||
* [[Legal implications of cash pooling structures]] | |||
* [[Merger reserve]] | * [[Merger reserve]] | ||
* [[Net assets]] | * [[Net assets]] | ||
* [[Parent company]] | * [[Parent company]] | ||
* [[Subsidiary]] | * [[Subsidiary]] | ||
* [[Substance over form]] | |||
== Other resource== | |||
[[Media:Apr15TTqualifications45-47.pdf| Purpose and process of consolidated group accounting. The Treasurer, April 2015.]] | |||
[[Category:Accounting,_tax_and_regulation]] | |||
Latest revision as of 13:38, 28 October 2023
Financial reporting - accounting practices.
Group accounts are an example of the 'substance over form' principle in financial reporting.
Some large businesses are organised as a single company. Other comparable businesses are structured as a group of companies, with a top holding company and other subsidiary companies.
If group accounts were not prepared, it would be very difficult to make appropriate comparisons.
The purpose of group accounts is to report the results and financial position of the businesses in a way that makes them readily comparable, even though they have different legal structures.
Consolidated group accounts report the activities of subsidiaries controlled by the holding company as part of the group's total activities.
They also treat the assets and liabilities of the subsidiaries as assets and liabilities of the group.
Appropriate proportionate interests in associated undertakings and joint ventures are also incorporated into the consolidated group accounts.
Preparing consolidated group accounts involves two stages:
- Aggregation to add up the individual assets and liabilities of all of the companies in the group.
- Consolidation adjustments to remove, for example, intercompany trading and indebtedness from the consolidated figures for the group.
The holding company of a group of companies is also sometimes known as the 'parent' company.
Businesses which are organised under a single company, rather than a group of companies, are sometimes known as 'divisionalised'.
(Their business units being a number of divisions, rather than a number of different companies.)
See also
- Accounting exposure
- Accounting group
- Aggregation
- Balance sheet exposure
- Consolidated
- Consolidated group accounts
- Consolidation
- Consolidation adjustments
- Goodwill on consolidation
- Group
- Income statement exposure
- Legal implications of cash pooling structures
- Merger reserve
- Net assets
- Parent company
- Subsidiary
- Substance over form
Other resource
Purpose and process of consolidated group accounting. The Treasurer, April 2015.
