Can a Company Established in July 2019 Consolidate the Financial Statements of 2020?
Point a Clause 2 Article 29 of the Accounting Law 2015 stipulates the preparation of financial statements by accounting units as follows:
An accounting unit must prepare financial statements at the end of the annual accounting period; in cases where the law stipulates the preparation of financial statements according to a different accounting period, the accounting unit must prepare them according to that period.
In principle, the accounting unit must prepare financial statements at the end of the annual accounting period, which means that each fiscal year, the enterprise will have to prepare a separate financial statement.
However, Clause 2 and Clause 4 of Article 12 of this Law stipulate the accounting period as follows:
- The accounting period of a newly established accounting unit is specified as follows:
a) The first accounting period of a newly established enterprise is calculated from the date the Enterprise Registration Certificate is granted to the end of the last day of the annual accounting period, quarterly accounting period, or monthly accounting period as prescribed in Clause 1 of this Article;
b) The first accounting period of other accounting units is calculated from the date the decision establishing the accounting unit takes effect to the end of the last day of the annual accounting period, quarterly accounting period, or monthly accounting period as prescribed in Clause 1 of this Article.
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- In cases where the first annual accounting period or the last annual accounting period is shorter than 90 days, it is permissible to combine it with the following annual accounting period or with the preceding annual accounting period to form a single annual accounting period; the first annual accounting period or the last annual accounting period must be shorter than 15 months.
According to this regulation, your company was established in July 2019, so by the end of 2019, the first accounting period of the company has lasted more than 90 days.
=> Therefore, it is not permissible to combine it with the next accounting period to make one financial statement, but a financial statement must be prepared for each separate year.
Sincerely!
