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Consolidated Financial Statements
The FS of a group in which the assets, liabilities,
equity, income, expenses and cash flows of the
parent and its subsidiaries are presented as those of
a single economic entity.

Separate Financial Statements

FS presented by a parent, an investor with joint
control of, or significant influence over, an investee,
in which the investments are accounted for at cost
or in accordance with PAS 39 or PFRS 9.
Control of an Investee
An investor controls an investee when the
investor is exposed, or has rights, to variable
returns from its involvement with the investee
and has the ability to affect those returns
through its power over the investee.
Investment entity
An entity that obtains funds from one or more
investors for the purposes of providing those
investors with investment management services.
 Consolidation procedures
Consolidated FS:
⮚ Combine like items of assets, liabilities, equity,
income, expenses and cash flows of the parent
with those of its subidiaries.
⮚ Offset (eliminate) the carrying amount of the
parent’s investment in each subsidiary and the
parent’s portion of equity of each subsidiary
⮚ Eliminate in full intra-group assets and liabilities,
equity, income, expenses and cash flows relating
to transactions between entities of the group
Non-controlling interests (NCI)
A parent presents NCI in its consolidated
statement of FS within equity, separately from
the equity of the owners of the parent.
Goodwill or a Gain from Bargain Purchase
For stock acquisition in contrast to statutory merger and statutory
consolidation, the comparison should be between the following:
I. The sum of:
⮚ The fair value of the consideration transferred
⮚ The recognized amount of any NCI in the acquiree
⮚ For a business combination achieved in stages, the fair value of any
previously held equity interest in the acquiree; and

II. The acquisition-date recognized fair value amount of the identifiable assets
acquired and liabilities assumed.

Goodwill arises when I exceeds II, under:

1. Option 1: Full Goodwill method – there is NCI share in the Goodwill
2. Option 2: Partial Goodwill method – there in no NCI share in Goodwill

Bargain purchase arises when II exceeds I.

 Accounting for Consolidated FS

ACQUISITION METHOD
A. Date of acquisition
B. Subsequent to Date of Acquisition
C. Transactions Between Affiliated Companies
⮚ Intercompany sales of inventory
⮚ Intercompany sales of fixed assets
⮚ Receivables and payable, Intercompany loans
Company G acquires 80% of Company Y for P10 million,
carrying value of company Y net assets at time of acquisition
being P6 million and fair value of these net identifiable assets
being P8 million.
1. Goodwill arising on consolidation is to be valued on the
proportionate basis or “Partial Goodwill” is?
2. The amount of non-controlling interest arising on
consolidation is to be valued on the proportionate basis or
“Partial” goodwill is?
3. The amount of goodwill arising on consolidation is to be
valued on the full (fair value) basis or “Full/Gross-up”
Goodwill?
4. Using the same information in No. 1, the amount of non-
controlling interest arising on consolidation is to be valued
on the full (fair value) basis or “Full/Gross-up” goodwill?
 Let’s Solve!
Entity Subsidiary has 40% of its share publicly traded on an exchange.
Entity Parent purchases the 60% non-publicly traded shares in one
transaction, paying P6,300,000. Based on the trading price of the
shares of Entity Subsidiary at the date of gaining control a value of
P4,000,000 assigned to the 40% NCI, indicating that Entity
Subsidiary’s identifiable net assets is P7,000,000 and a carrying value
of P5,000,000.
1. Goodwill arising on consolidation is to be valued on the
proportionate basis or “Partial Goodwill” is?
2. The amount of non-controlling interest arising on consolidation
is to be valued on the proportionate basis or “Partial” goodwill
is?
3. The amount of goodwill arising on consolidation is to be valued
on the full (fair value) basis or “Full/Gross-up” Goodwill?
4. Using the same information in No. 1, the amount of non-
controlling interest arising on consolidation is to be valued on
the full (fair value) basis or “Full/Gross-up” goodwill?
THANK YOU!
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