Impact of the European Union
The IAS Regulation
Harmonisation through Directives
International Accounting Standards Board
Primary financial statements
Notes to financial statements
Accompanying information
Primary financial statements
Statement of financial position (balance sheet)
Income statement (profit and loss account)
Statement of changes in equity
Notes to financial statements
Required by the Companies Act 2006 and accounting standards
Accounting policies
Detailed analysis of some numbers
Information about uncertainties
Financial Accounting
Accompanying information
Strategic report
Chairmans statement
Statement of financial position (balance sheet), income statement and statement of changes
in equity
No standard format under IFRS
Basic lists of items specified but expect variation in method of presentation
For non-IFRS companies, formats are based on an Accounting Directive and included in the
Companies Act 2006.
What do you want to know about a company?
What drives cash flow and profit?
Quality of management?
Forward-looking information?
Where do you find information about a company?
One-to-one meetings with directors
Financial Accounting
Preliminary announcement of results
Half-yearly (interim) reports
Prospectus
Define group.
The importance of control
The parent companys statement of financial position (balance sheet)
Acquisition or merger?
Acquiring a subsidiary for cash
Financial Accounting
Acquiring a subsidiary by exchange of shares
For a share exchange, the effect on the parent companys statement of financial position
(balance sheet) is to increase the assets and increase the ownership interest. In terms of the
accounting equation:
The consolidated statement of financial position (balance sheet): cost of investment in S
equals net assets of S
Net assets of P plc Net assets of S plc
Financial Accounting
(a) Bringing together all
assets and liabilities
(b) Group s consolidated
statement of financial
position (balance sheet)
Financial Accounting
Net assets of P plc Net assets of S plc
Group net assets
Difference on consolidation is called ..
It is shown in the group statement of financial position (balance sheet) with the intangible
non-current (fixed) assets at the start of the statement of financial position.