Procedure for Consolidating the Balance Sheet and Income Statement

22:49, 10/07/2024

Recently, the Ministry of Finance issued Circular 202/2014/TT-BTC guiding the methods of preparing and presenting consolidated financial statements.

Sequence of Consolidating the Balance Sheet and Income Statement, Circular 202/2014/TT-BTC

Sequence of Consolidating the Balance Sheet and Income Statement (illustrative image)

Circular 202/2014/TT-BTC stipulates the sequence of consolidating the Balance Sheet and Income Statement between the parent company and its subsidiaries as follows:

Aggregate the items in the Balance Sheet and Income Statement of the parent company and its subsidiaries in the group.
Eliminate the entire book value of the parent company's investment in each subsidiary, the net assets held by the parent company in the equity of the subsidiary, and recognize goodwill or gain from a bargain purchase (if any).
Allocate goodwill (if any).
Separate non-controlling interests.
Eliminate all intra-group transactions.
Prepare the Consolidated Adjustment Entries Sheet and the Consolidated Items Summary Sheet. After preparing the adjustment entries, based on the difference between the increase and decrease adjustment amounts of the items in the Income Statement, the accountant shall make transfer entries to reflect the total impact arising from revenue and cost adjustments on undistributed post-tax profits.
Prepare the consolidated financial statements based on the Consolidated Items Summary Sheet after adjustments and eliminations for intra-group transactions.

For details, see Circular 202/2014/TT-BTC effective from February 27, 2015.

Ty Na

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