Consolidating accounts examples
Minority Interest - It is that part of the net results of operations and of the net assets of a subsidiary attributable to interests which are not owned, directly or indirectly through subsidiary(ies), by the parent.
- In other words, it is that portion of results and net assets which are not owned by the Holding Company Consolidation Procedure: Minority Interest Computation Minority interests in the net income of consolidated subsidiaries for the reporting period 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 of consolidated subsidiaries should be identified and presented in the consolidated balance sheet separately from liabilities and the equity of the parent�s shareholders.
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These processes are described in the following sections.
Consolidation requirement under Companies Act, 2013 (�Act, 2013�) Section 129 (3) read with Rule 6 of the Companies (Accounts) Rules, 2014 (Rules) provides manner of consolidation of financial statements of subsidiaries pursuant to Schedule III of the Act, 2013 and the applicable Accounting Standards.
AS 21 : Consolidation of Accounts Consolidate Financial Statements (CFS) Definition � Scope Definition of Control When one entity� Directly or indirectly through subsidiary, owns more than 50% of the voting power.
OR� Has power to control the composition of Board of Directors of another company for economic benefits.
For example, if you have companies that you own only partially, or you have companies that you do not want to include in the consolidation.
You set up the consolidated company in the same way that you set up other companies.
Example Suppose company B is having Net worth of Rs 10 lac, company A purchases 75% of share of company B, then remaining 25% i.e. Presentation as per Schedule III The CFS prepared in the same format as that of Separate Financial Statements, i.e, Schedule III of Companies Act 2013 Exclusion of Subsidiaries from Consolidation The Holding Company shall consolidate the financial statements of all the subsidiaries, domestic or foreign other than: Temporary Investment - When the shares are held in subsidiary company for disposal in near future.