SPECIFIC OPERATIONS FOR ACCOUNTS’ HOMOGENIZATION WITH A VIEW TO CONSOLIDATION

Mihai Deju

doi:10.29358/sceco.v0i26.391

Abstract

<p>The preparation of annual consolidated financial statements by group companies represents a relatively new problematic issue for regulating bodies, the world of the academia, as well as for accounting practitioners. The current national and international accounting standards undergo a continuous change and updating to the economic and judicial reality of the business environment which, in turn, goes through a permanent transformation as a result of the globalization of national economies. These novelties raise the necessity of debates organised by accounting specialists with the aim of finding solutions that respect legal regulations related to the preparation of financial statements for consolidation. The present article approaches accounting aspects related to the operation of adjusting individual financial statements that are the object of consolidation.</p>

Highlights

We can conclude that the annual individual financial statements of the entities included in the consolidation perimeter/scope, i.e. subsidiaries, associated entities or entities over which common control is exercised and which use evaluation methods or accounting policies that differ from those applied when drawing up annual consolidated financial statements, must be restated obligatorily and waivers from this requirement are accepted only in exceptional cases
In the case of consolidation on the basis of accounts aggregation ⃰, adjustments are made both for the differences corresponding to the current financial year and for the differences corresponding to the previous financial years, with the mentioning that the adjustments corresponding to the previous financial years affect equities and the adjustments corresponding to the current financial year affect its financial result
% 6811 “Operating expenses related to the amortization of fixed assets” 106 “Reserves”. As it can be concluded from the contents of the approached theme, accounting standards specific to the consolidation of financial statements by group companies represent for specialists, both theoreticians and practitioners in the field of accounting, an issue undergoing full dynamic and which requires permanent debate with a view to finding the most adequate implementation solutions

Summary

Introduction

Accounting standards regarding the preparation of annual consolidated financial statements[1] stipulate a series of rules concerning the homogenization of the financial statements of the entities that are to be consolidated, as follows: a) when an entity included in the consolidation perimeter/scope (group member) employs, for similar transactions and events under similar circumstances, other accounting policies than those adopted in the case of annual consolidated financial statements, in order to ensure conformity to the group accounting policies, before being included in the consolidated financial statements, the individual financial statements of the respective entity must be adjusted in the corresponding manner; b) the entity that prepares the annual consolidated financial statements must apply the same evaluation methods as in the case of its own annual financial statements, which means that the assets and the liabilities of the entities included in the consolidation perimeter/scope will be evaluated by means of the same methods when they are included in the annual consolidated financial statements, methods which the entity that prepares consolidated financial statements uses for drawing up its own annual financial statements, respectively its annual consolidated financial statements; c) în the case of assets which were adjusted to fair market value, only for fiscal purposes, the annual consolidated financial statements will include them only after eliminating the respective adjustments. Given the different depreciation policies used by the parent company and its subsidiary for similar tangible fixed assets, at the time of the consolidation, company “A” will start adjusting (restating) the annual consolidated financial statements prepared by company “B” (subsidiary) in compliance with the Accounting standards regarding consolidated financial statements in effect, which were previously mentioned.

Results

Conclusion