⏱TIMESTAMPS 00:00 - Intro 00:09 - Purpose & Meaning 06:26 - Amalgamation vs Consolidation 08:53 - Control Assessment 11:45 - Minority Interest 15:53 - Net Assets 17:54 - Intra Group Transactions 24:18 - Cost of Control 28:13 - Pre & Post Acquisition Profits 1:00:13 - 4 Working Notes
@AYON SAHA when multiple companies join to form a new entity that is consolidation ... when a 2 entity combines and has identity exist only for one among them its merger ...... amalgamation is when 2 or more entities combines and form new identity ............i dont know if its what u expected just shared wt i understood
@@sneha3079 I think you are wrong here. 1) when 2 or more companies combined and form a new company by loosing it's existence is called amalgamation which can be in the nature of merger or in the Nature of purchase. For it to be in the Nature of merger means : several conditions need to be fulfilled which are mentioned in As-14 Otherwise it will be amalgamation in the nature of purchase. 2) when One company takes over another company it's called absorption. In this the selling company loose it's existence too like amalgamation. And absorption is also in the nature of merger and in the nature of purchase just like amalgamation. The only difference between Amalgamation and absorption is: in amalgamation more than one entity forms a new company where else in absorption one company which can be existing or new takes other other company. From Accounting point of view there is no difference between Amalgamation and absorption, that's why in As-14 accounting is done only based on : in the nature of merger or in the nature of purchase. 3) In consolidation no entity looses it's existence rather they continue to exist. It's just purchasing of shareholding from open market by another company. So, the purchasing company don't purchase the whole company rather it invests in another company and its known as "acquisition". At the year end every entity will prepare their seperate Balance sheet plus parent holding company will prepare consolidated Financial statements of the whole group along with its stand alone statements. Statements includes: balance sheet, p/L and Cash Flow Statement. So every company will prepare these statements and the ultimate parent company will also prepare Consolidated statements which shows the entire business of that group together. I hope I clear many misunderstanding on this issue.
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00:01 Understanding the basics of consolidated financial statements is crucial for CA Inter Group 2 advance accounts. 01:53 Consolidated financial statements combine the financials of the parent company and its subsidiaries into one report. 05:43 Consolidation is about combining separate financial statements into a single set for the whole group 07:33 Consolidation combines financial statements of parent and subsidiary companies. 11:21 Control of 100% requires full consolidation 13:19 Consolidation involves combining all financial statements into one entity 16:48 Liquidating a company involves selling assets, paying off liabilities, and distributing remaining funds to equity shareholders. 18:21 Consolidated financial statements combine separate financial statements for shareholders. 21:39 Consolidation involves canceling out the investment in subsidiary and the net assets owned by the parent. 23:06 Consolidation is replacing investment in sub of parent by assets and liabilities of subsidiary company 26:11 Goodwill represents future benefits in acquiring a business. 27:40 The gain from the investment is transferred to capital reserve. 30:58 Acquiring a subsidiary on the opening day results in the entire year being considered as the post-acquisition period. 32:35 Acquiring 80% stake means acquiring 80% of net assets of the company. 35:54 Calculation of net assets on the date of acquisition 37:31 Post-acquisition profit impacts subsidiary's net assets 40:55 Profit needs to be split into pre-acquisition period and post-acquisition period 42:39 Calculation of pre-acquisition profit and time adjustment 46:08 Pre-acquisition net assets calculated using equity/share capital 47:48 Calculation of minority interest 51:00 Treatment of profit and loss for consolidation 52:38 Parent company acquires net assets and records goodwill or capital reserve based on cost of investment. 56:08 Post acquisition profit is revenue profit earned by the subsidiary. 57:44 Owners of the company are split into 80% parent and 20% minority interest. 1:00:54 Calculate pre-acquisition and post-acquisition net assets 1:02:37 Calculate post acquisition profits 1:05:51 Time adjustment is needed to apportion the movement in the entire year. 1:07:21 Consolidating total balances and dividing net assets 1:10:38 Minority interest is calculated as 20% of subsidiary's share capital and profits. 1:12:11 Consolidation of parent and subsidiary general reserves and profit and loss accounts 1:15:11 Time apportionment and analysis of profit of subsidiary 1:16:39 Understanding adjustments in consolidated financial statements
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