Introduction to Reporting the Financial Results of Groups of Companies
Group of companies
It is fairly common for one company to be capable to exercise control over the activities of another. Control generally occurs because the first company (the parent company) owns more than 50% of the ordinary (voting) shares of the second company (the subsidiary company). This directs to the directors of the parent company being capable to select the directors of the subsidiary company and, so being able to dictate its policies. In which this relationship occurs, a 'group' (of companies) is said to present. In which there is a group, the relevant International Financial Reporting Standards (IAS 27 Consolidated and Separate Financial Statements and IFRS 3 Business Combinations) generally need that a set of financial statements is drawn up yearly not only for each individual company, but also for the group taken like a whole. Before we carry on to refer how the group financial statements (i.e., the financial statements of a group of companies) are ready, we shall look at the reasons why groups present at all and at the types of group relationships that can presented.
Why do groups exist?
Companies contain subsidiaries where:
1. The parent company forms a new company to operate some part of its business, may be a new activity.
2. The parent company buys a majority, may be all, of the shares of some other existing company - i.e., a 'takeover'.
Several companies contain subsidiaries as a result of both of these reasons.
Newly created companies
It is extremely common for large businesses to be made up of some individual companies. These companies are controlled through a parent company, occasionally termed as the 'holding' company. In a number of cases, the only assets of the parent company are the shares which it owns in the subsidiary companies. Even though the subsidiary companies own the land, buildings, machinery, inventories and so on, because the parent owns the subsidiaries, it efficiently controls the productive assets of those companies.
An evident question to ask is: why do businesses operate by subsidiaries?
To put it other way, why do the parent companies not own all of the assets of the business directly, in its place of them being owned through the subsidiaries? The answers to these questions are possibly:
Every individual company has limited liability. The meaning of this is that if there is a financial failure of one subsidiary, neither the assets of another subsidiaries nor those of the parent could be legally demanded through any unsatisfied claimants (lenders, trade payables and so on) against the failed company. So the group can 'ring-fence' each part of the business through having separate companies, every along with its own limited liability.
A sense of autonomy and independence might be created that could, in turn, raise levels of commitment between staff. It might also assist to develop, or perpetuate, a market image of a smaller, independent business. Customers, and staff, might prefer to deal along with what they see as a smaller, specialist business than along with a division of a large diversified business.
To make a subsidiary, the would-be parent might simply create a new company in the general way. The new company would after that issue shares to the parent, in exchange for a number of asset or assets of the parent. In which the new subsidiary has been created to undertake an entirely new activity, the asset might well be cash. If the subsidiary is to continue some activity that the parent had undertaken directly up to that point, the assets are probable to be such things as the non-current and current assets related with the specific activity.
Takeovers
A would-be parent company might also form a subsidiary through taking over an existing company. Now it buys more than 50% the shares of a hitherto, not connected target company to able it to exercise control, so making the target a subsidiary company. Certainly the shares are bought from the existing shareholders of the target company.
In several takeovers, the parent presents its own shares as all, or part of, the bid consideration. The meaning of this is that target company shareholders who accept the offer will exchange their existing shares for shares in the parent. So, they cease to be shareholders of the target company and become shareholders in the parent.
Latest technology based Financial Accounting Online Tutoring Assistance
Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Financial Results of Groups of Companies homework help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Financial Results of Groups of Companies, project ideas and tutorials. We provide email based Financial Results of Groups of Companies homework help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Financial Results of Groups of Companies. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Financial Accounting homework help and assignment help services. They use their experience, as they have solved thousands of the financial accounting assignments, which may help you to solve your complex issues of Financial Results of Groups of Companies. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.
Theory and lecture notes of Systems of Equations and Inequalities all along with the key concepts of Linear Inequalities, Systems of Linear Inequalities, Multivariable Linear Systems, Partial Fractions. Tutorsglobe offers homework help, assignment help and tutor’s assistance on Systems of Equations and Inequalities.
www.tutorsglobe.com offers free tutorial and concepts of introduction to game theory, characteristics of game theory, limitations of game theory, properties of a game and classifications, get solved homework assignment help in game theory.
tutorsglobe.com braggs equation assignment help-homework help by online solid state chemistry tutors
tutorsglobe.com capital rationing assignment help-homework help by online capital budgeting and project planning tutors
tutorsglobe.com functions of free antibodies assignment help-homework help by online acquired immunity tutors
Theory and lecture notes of Counting Techniques all along with the key concepts of Counting techniques, Basic Definitions, Factorial, Permutation, homework help, Combination and Tree Diagram. Tutorsglobe offers homework help, assignment help and tutor’s assistance on Counting Techniques.
Avail the most prominent Industrial Microbiology Assignment Help from top-rated experts and earn top grades at reasonable prices.
we offer 24x7 impeccable zoology assignment help service from subject matter experts to score high grades at the most competitive prices.
tutorsglobe.com techniques of immunofluorescence assignment help-homework help by online antigen antibody reactions tutors
www.tutorsglobe.com offers Functional Independence homework help, assignment help, case study, writing homework help, online tutoring assistance by computer science tutors.
Theory and lecture notes of Data communication all along with the key concepts of operating system, Messages, Sessions, network manager, Transmission control, Pacing dividing. Tutorsglobe offers homework help, assignment help and tutor’s assistance on Data communication.
tutorsglobe.com eye infections assignment help-homework help by online receptor organs tutors
www.tutorsglobe.com offers humanities homework help, humanities assignment help, humanities online tutoring and answering questions to humanities subject.
tutorsglobe.com properties of copper assignment help-homework help by online occurrence and principles of extraction of copper tutors
tutorsglobe.com procedure for micropropagation assignment help-homework help by online micropropagation tutors
1940232
Questions Asked
3689
Tutors
1485994
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!