Consolidated Statement of Financial Position

avalon1163

Good evening,

After an afternoon trying to work it out on my own, I decided to ask it here.

If a parent company owns, let's say, 60% of the subsidiary, the share capital and the reserves needs to be adjusted accordingly - by 60%.

Question: why not the non current assets?

Thank you in advance.

Sibylle

anniebabe

Hello
It is because the parent has control over the subsidiary, although they do not own the non current assets - they still show 100% in the statements.
Hope this makes sense.

avalon1163

Thank you!

Clintm15

Hi Sibylle,

Could you give a little more detail on exactly what you mean? I find your question a little confusing.

Kind regards

Clint

avalon1163

Hi Clint,

I guess I got there in the end thanks to some answers I received from my tutor:

If a company holds more than 50% of the share capital of another company it means they have control over that company (they own more than 50% of the voting rights so what they say goes) Because they control the company when the groups accounts are drawn up the assets and liabilities are all shown at 100% as if it was one company. Then in the bottom half of the SFP we have to take account of the fact that some of the groups is owned outside of the group (the non controlling interest) and we do this by splitting the reserves and equity into group and non controlling interest. Very simplistically, the SFP shows all the assets and all the liabilities of the group, then the equity section shows how those assets and liabilities are shared out amongst the share holders.

Thanks,

Sibylle