Lecture 3 consolidation of financial statements part 1

Question 1

Consolidated financial statements

Answer 1

The financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single company. This is an integral part of the IFRS (international finance reporting standards)

Question 2

Goodwill

Answer 2

Difference between takeover price and book value. Premium paid on top of the book value of the acquisitions. (take over price - book value)

Question 3

Minority interest

Answer 3

The interest in the subsidiary that still belongs to the original shareholders. It only shows up on the consolidation balance sheet.

Question 4

Market to book ratio calculation

Answer 4

market value per share/ book value per share

Question 5

Book value

Answer 5

Total assets - total liabilities

Question 6

Total takeover amount

Answer 6

Goodwill + financial asset

Question 7

Accounting systems goodwill

Answer 7

Accounting systems IFRS treat goodwill as an asset to be put on balance sheet

Question 8

How to Calculate minority interest

Answer 8

Particular percent x the book value of the subsidiary

Question 9

Common stock on the consolidated balance sheet

Answer 9

The equity of the parent company

Question 10

Market to book ratio

Answer 10

The market to book ratio shows how much value over the book value is created

Question 11

The total takeover amount

Answer 11

Goodwill + financial assets