高级财务会计PPT3
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• Financial ratios are not necessarily representative of any single company in the consolidation.
3-5
Limitations of Consolidated Financial Statements
• Similar accounts of different companies that are combined in the consolidation may not be entirely comparable.
• Two companies are considered to be related when one controls the other or both are under the common control of another entity.
• The same accounting principles should be applied in preparing consolidated financial statements as in preparing separate-company financial statements.
• Presented primarily for those parties having a longrun interest in the parent company, including its management, shareholders, long-term creditors or other resource providers.
• Because subsidiaries are legally separate from their parents, the creditors and stockholders of a subsidiary generally have no claim on the parent, and the stockholders of the subsidiary do not share in the profits of the parent.
• More useful than the separate financial statements of the individual companies when the companies are related.
3-3
Benefits of Consolidated Financial Statements
• Often provide the only means of obtaining a clear picture of the total resources of the combined entity that are under the parent's control.
3-4
Limitations of Consolidated Financial Statements
• Consolidated financial statements present the financial position and results of operations for a parent (controlling entity) and one or more subsidiaries (controlled entities) as if the individual entities actually were a single company or entity.
• Results of individual companies included in the consolidation are not disclosed, thereby hiding poor performance.
• Not all the consolidated retained earnings balance is necessarily available for dividends of the parent.
• Additional information about companies may be needed for a fair presentation, thus requiring voluminous footnotes.
• Information is lost any time data sets are aggregated.
McGraw-Hill/Irwin
3
The Reporting Entity and
Consolidated Financial
Statements
© 2009 The McGraw-Hill Companies, Inc. All rights reserБайду номын сангаасed.
Consolidated Financial Statements
3-2
Consolidated Financial Statements
• Consolidation is required when a corporation owns a majority of another corporation’s outstanding common stock and occasionally under other circumstances.
3-6
Subsidiary Financial Statements
• Creditors, preferred stockholders, and noncontrolling common stockholders of subsidiaries are most interested in the separate financial statements of the subsidiaries in which they have an interest.
3-5
Limitations of Consolidated Financial Statements
• Similar accounts of different companies that are combined in the consolidation may not be entirely comparable.
• Two companies are considered to be related when one controls the other or both are under the common control of another entity.
• The same accounting principles should be applied in preparing consolidated financial statements as in preparing separate-company financial statements.
• Presented primarily for those parties having a longrun interest in the parent company, including its management, shareholders, long-term creditors or other resource providers.
• Because subsidiaries are legally separate from their parents, the creditors and stockholders of a subsidiary generally have no claim on the parent, and the stockholders of the subsidiary do not share in the profits of the parent.
• More useful than the separate financial statements of the individual companies when the companies are related.
3-3
Benefits of Consolidated Financial Statements
• Often provide the only means of obtaining a clear picture of the total resources of the combined entity that are under the parent's control.
3-4
Limitations of Consolidated Financial Statements
• Consolidated financial statements present the financial position and results of operations for a parent (controlling entity) and one or more subsidiaries (controlled entities) as if the individual entities actually were a single company or entity.
• Results of individual companies included in the consolidation are not disclosed, thereby hiding poor performance.
• Not all the consolidated retained earnings balance is necessarily available for dividends of the parent.
• Additional information about companies may be needed for a fair presentation, thus requiring voluminous footnotes.
• Information is lost any time data sets are aggregated.
McGraw-Hill/Irwin
3
The Reporting Entity and
Consolidated Financial
Statements
© 2009 The McGraw-Hill Companies, Inc. All rights reserБайду номын сангаасed.
Consolidated Financial Statements
3-2
Consolidated Financial Statements
• Consolidation is required when a corporation owns a majority of another corporation’s outstanding common stock and occasionally under other circumstances.
3-6
Subsidiary Financial Statements
• Creditors, preferred stockholders, and noncontrolling common stockholders of subsidiaries are most interested in the separate financial statements of the subsidiaries in which they have an interest.