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FAGC Revision Notes - Essay plan., Essays (university) of Financial Accounting

The document is a set of revision notes for Financial Accounting for Groups & Companies (FAGC), focusing on consolidation, non-controlling interests (NCI), and internal company transactions. It explains why companies combine, types of combinations (takeovers, mergers, joint ventures), and the IFRS standards governing group accounts (IFRS 10, IFRS 3, IAS 28). The notes detail the consolidation process, including steps for preparing group accounts, calculating goodwill, and handling NCI. It also covers mid-year acquisitions and adjustments for internal transactions like indebtedness, dividends, and inventory transfers. The material emphasizes the importance of group accounts for investor protection,prediction, and accountability, using examples like Tesco PLC to illustrate the need for consolidated financial statements. The notes are practical, with step-by-step guidance and journal entries for consolidation adjustments.

Typology: Essays (university)

2024/2025

Available from 03/06/2025

charles-khama
charles-khama 🇮🇹

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3/6/25, 6:33 PM FAGC Revision Notes - Essay plan Financial Accounting for Groups & Companies Revision Notes. -c eae Why do companies combine? - Growth of the business © Added assets © Established business in existing markets, customers - Economies of Scale - Elimination or reduction of competition (Craft and Cadbury have ‘more power combined to compete with Nestlé) Buy supplier/customer (Facebook acquired 66 companies from 2005 onwards to acquire different aspects of businesses) - Take-over or acquisition © Buy out of shares, - Merger/Uniting of Interests ‘© Businesses share control © Can be controlled by EU law linked to unfair competition ~ Joint ventures ‘0 Ran jointly by two or more businesses equally Underlying Concept of a combination __ - Parent company concept ‘© Company buys shares in a business making this a subsidiary = Control ‘© The level of control held dictates the consolidation of the business accounts - Significant influence © This occurs when there is not full control, this leads to equity accounting - Legal control v Economic control ‘0 Who owns the shares legally? (© The spread of ownership can lead to control being dispersed Categories of Investment: __ ‘Non-Controlling Interest = <20% shares held = Classed as an Ordinary or simple investment - No consolidation - Non-controlling influence is not consolidated and is known as a simple investment and taken to the SOFP ‘© DR Investment Asset about:blank 1/42