tailieunhanh - Ebook Advanced accounting (11th edition): Part 2

(BQ) Part 2 book "Advanced accounting" has contents: Consolidation theories, push down accounting, and corporate joint ventures; derivatives and foreign currency - Concepts and common transactions; accounting for derivatives and hedging activities; foreign currency financial statements,. and other contents. | 11 CHAPTER Consolidation Theories, Push-Down Accounting, and Corporate Joint Ventures P revious chapters have described practices used in the preparation of consolidated financial statements and have explained the rationale for those practices. The concepts and procedures discussed in earlier chapters reflect the contemporary theory of consolidated statements. Contemporary theory has evolved from accounting practice and is essentially an entity theory approach to the preparation of consolidated financial statements. Traditional theory (GAAP prior to 2001 [1]) reflected parts of both parent-company theory and entity theory. Parent-company theory assumes that consolidated financial statements are an extension of parent statements and should be prepared from the viewpoint of parent stockholders. Under parent-company theory, we prepare consolidated statements for the benefit of the stockholders of the parent, and we do not expect that noncontrolling stockholders can benefit significantly from the statements. Consolidated net income under parent-company theory is a measurement of income to the parent stockholders. Certain problems and inconsistencies in accounting procedures under parent-company theory arise in the case of less-than-100 percent-owned subsidiaries. For example, the noncontrolling interest is a liability from the viewpoint of parent stockholders, and published statements frequently reported the noncontrolling interest in the liability section of the consolidated balance sheet. Similarly, noncontrolling interest share is an expense from the viewpoint of controlling stockholders. However, shareholder interests, whether controlling or noncontrolling, are not liabilities under any of the accepted concepts of a liability, and income to shareholders does not meet the requirements for expense recognition. The problem lies in the controlling shareholder viewpoint. Entity theory represents an alternative view of consolidation. It was developed by .