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Course Objective

The course will help students practically, particularly in preparing consolidated financial statements. It will also help to demonstrate an understanding of the application of GAAP, IFRS, ISA relating to Business Combinations and its relationship with reporting practices, demonstrate an understanding of the accounting techniques and methods associated with the formation and liquidation of businesses.

24.2 Course Description

This course is designed to help students grasp the background of Financial Statements and International Accounting issues. These topics require a working knowledge of GAAP and the embodiment of IFRS and IAS, and their relationship with tax assessment.

24.3 SYNOPSIS

24.3.1 Business Combinations

* The concept of groups and the objective of consolidated financial statements * The different methods which could be used to prepare consolidated financial statements * Subsidiary companies * The circumstances and reasoning for subsidiaries to be excluded from consolidated financial statements in accordance with relevant accounting standards * Consolidated balance sheet for a simple group dealing with pre and post-acquisition: profits, minority interests and consolidated goodwill * Uniform accounting policies when preparing consolidated financial statements * Consolidated Income Statement for a simple group, including an example where an acquisition occurs during the year with a minority interest 24.3.2 Business Combinations -Intra-Group Adjustments

* Explain why intra-group transactions should be eliminated on consolidation * Explain the nature of a dividend paid out of pre-acquisition profits
* Account for the effects (in the income statement and balance sheet) of intra-group trading and other transactions including: * Intra-group loans and interest and other intra-group charges, and * Intra-group dividends including those paid out of pre-acquisition profits 24.3.3 Business Combinations-Fair Value Adjustments

* Consolidated financial statements dealing with fair value adjustments(including their effect on consolidated goodwill) * Depreciating and non-depreciating of non-current assets * Inventories * Monetary liabilities(basic discounting techniques may be required) * Assets and liabilities(including contingencies) 24.3.4 Business Combinations -Associates and Joint Ventures

* Associates and joint ventures(I.e. jointly controlled operations, assets and liabilities * Distinguish between equity accounting and proportional consolidation * Formats of proportional consolidations * Consolidated financial statements to include a single subsidiary and an associated company or a joint venture. 24.3.5 Business Combinations - Uniting of Interests

* Uniting of interests or as a purchase (acquisition accounting) * Business combination and uniting of interests. * Company ratios relating to: * A company's previous period?s financial statements * Another similar company for the same period * Industry average ratios * Different accounting policies between companies. * Limitations in the use of ratio analysis for assessing corporate performance 24.3.6 Cash Flow Statements

* Cash flow statement.

24.3.7 Segmental Reporting

* The usefulness and problems associated with the provision of segmental information * Reportable segment and the information that is to be reported (primary and secondary formats) * Preparation of segment reports in accordance with relevant accounting standards * Assessment of performance of a company based on the information contained in its segment report 24.3.8 Interpretations of Financial Statements

* Horizontal Analysis Techniques * Failure Prediction Ratios 24.3.9 Revenue Measurement and Price Level Changes

* Current Value Accounting * Capitalization method * Replacement Cost * Net Realizable Value Accounting * Accounting For Price Level Changes * Current Purchasing Power Accounting * Concept of Capital and Capital Maintenance * Capital, Income and Value Measurement * Accounting For Income and Economic Income