Monday, April 22, 2013
Thursday, April 18, 2013
STATEMENT OF CASH FLOW
CASH FLOW (Easy System)
Profit Before Tax (PBIT)
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xxxxxx
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Add:
Depreciation
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xxxxx
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Less:
Profit on Disposal
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(xxxxx)
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Add:
Loss On disposal
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xxxxx
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Less:Increase
in Inventory
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(xxxxx)
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Add:
Decrease in Inventory
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xxxxx
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Less:
Increase in Receivable
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(xxxxx)
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Add.:
Decrease in Receivable
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xxxxx
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Less:
Decrease in Payable
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(xxxxx)
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Add:
Increase In Payable
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xxxxx
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|
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xxxxx
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Cash
Flow from Operation
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xxxxx
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Less
Interest Paid
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(xxxxx)
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Less
Tax Paid
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(xxxxx)
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xxxxx
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Net Cash From Operating Exp.
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xxxxx
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Investing
Activities
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Less:
Purchase of non Current Asset
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(xxxxx)
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Add:
Sale of Non Current Asset
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xxxxx
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Add:
Dividend Received
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xxxxx
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Add.:
Interest Received
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xxxxx
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Financing
Activities
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Add:
Issue of Share
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xxxxx
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Less:
Repayment of Loan
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(xxxxx)
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Add:
Loan From Others
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xxxxx
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Less:
Dividend Pay/Interest Pay
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(xxxxx)
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Wednesday, April 17, 2013
Consolidated Financial Statements
The general principles involved in
consolidated financial statements are:
1. A consolidated financial
statement should essentially provide true and fair picture of financial
condition and operating result of the business faction.
2. A consolidated financial
statement needs to be prepared on the basis of legal-entity based financial
statements of the parent company and its subsidiaries which belong to the
business faction, and prepared in accordance with the GAAP.
3. A consolidated financial
statement needs provide a clear vision about the financial info requisite for
interested parties not to mislead their judgments about the business groups’
condition.
4. The procedures and policies used
for preparing consolidated financial statements need to be applied ad infinitum
and should not be changed without any reason.
Checklist for preparation of
consolidated financial statements
1. Estimate group holdings and
establish each entity’s status in the question.
2. Ascertain the fair value of
acquired assets and calculate net assets of the subsidiary.
3. Estimate goodwill arising on
acquisition.
4. Adjust for any intra-group
activities.
5. Estimate the balance carried
forward on consolidated retained earnings.
Few theory:
Consolidated
Sales = Total Individuals Sales – Intra group Sale
Consolidated
COGS = Total Cost – Intra group Sales + Unrealized profit
Consolidated
COGS = Total Cost – (Intra group Sales - Unrealized profit)
Consolidated
Profit = Total Individual Profit – Unrealized Profit
Consolidated Receivable = Total receivable –Intra group
Receivable
Consolidated Payable = Total Payable –Intra group Payable
Closing
Inventory increase profit will increase
If A
parent company have Only Associate
company then it will not possible to create consolidated accounts.
Need at
least on e subsidiary company.
Parents
company of Associate company profits will show profit after tax in Associate
will show profit before tax in consolidated accounts.
NCI =
Fare value + Post acquisition profit – unrealized Profit as per percentage
If Parent
Sold to Subsidiary Company and if any unrealized profit gain then the full
amount of unrealized profit will be deduct from the group profit.
If
Subsidiary Sold to Parent Company and if any unrealized profit gain then the
percentage of unrealized profit will
deduct from the group profit. And Unrealized profit will deduct From NCI (as
per percentage of NCI)
GoodWill=
Trasfer share capital + NCI at the date of acquisition –Share capital-Retained
earnings – Fair value of plant higher than carrying value
CALCULATION FORMAT
CALCULATION FORMAT
Consolidated SOCI
Description
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P.Co.
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S.Co.
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Workings
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Consolidated SOCI
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Revenue
Cost
of Sales
Gross Profit
Administrative
Expense
Profit Before Taxation
Income
Tax
Profit
Attributable to Owners of P.Co of NCI
Investment
on Retained Earnings
Group profit for the year
Retained
Earnings b/f
Retained
Earnings c/f
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Goodwill Calculation
Consideration
Transferred ****
Add: Non
Controlling Interest ****
Total ****
Less:
Net Acquisition-date Faire Value
of
identifiable assets acquired ****
Ordinary
Share Capital ****
Share
Premium ****
Retained
earnings at acquisition ****
Fair
value adjustment at acquisition ****
****
Goodwill ****
NON CONTROLLING INTEREST CALCULATION
1. NCI = Opening
NCI + Year End retained Earning x % of NCI
(If Opening and Closing retained earning
are given separately)
2. NCI = Opening NCI + (Closing Retained Earning –
Opening Retained Earning) x % of NCI
3. Cost of the Investment = Ordinary Share Value + Retained Earnings at
acquisition + Profit as per percentage and proportionate time (month) +
Goodwill
4. Cost of the Investment = Ordinary Share Value + Retained Earnings at
acquisition + Profit as per percentage and proportionate time (month) +
Goodwill- Non controlling interest (if any)
Such as Parent company acquires Subsidiary
company on 1st October, 2012 and the year end is 31st
December,2012. So, Profit proportionate is 1st October to 31st
December that means 3 months.
If
profit is 80000 tk during the year then the cost of investment will be 80000 x
9/12 = 60,000 tk. which is the cost of investment.
5.
For Associate Company ,no legal form of Consolidated Income
Statement and no need to prepare consolidated Income Statement.
6.
For Subsidiary Company Consolidated Income Statement is
Required.
7.
If any parents comapny has no subsidiary company only associate
company the no need to prepare consolidated income Statement. In this purpose
SOFP Shows the Investment in Associate and the income will show in the SOCI,
before tax.
8.
Mark Up
40% means When Sales 100 then CGS 125.
Ex. If sales 5000tk then CGS will be 5000x
100/125 = 40000
And Profit will be – 50,000 – 40000
If
unrealised profit then how to calculate consolidated retained earning:
Condition : 100%
Acquire
If Subsidiary company
sold some goods to parents company but the goods still in inventory then the
unsold goods profit will be deduct (as per parents company percentage ) from the retained earnings then added parents company retained
earnings.
Condition : less than 100%
such as 60% Acquire
If the above condition is presence
1.
Calculate the intra group sales profit
2.
Calculate unsold/unrealized profit as per percentage
3.
Deduct the unrealised profit from the consolidated gross profit
Example:
On 1May 2008 Symphony Co. Acquired 60% of the share capital of Sprint for
1,20,000 $. During the year Symphony Co. sold goods to sprint Co for $30,000
including a profit margin of 25%. 40% of these goods were in inventory at the
year end.
The
following extract was taken from the financial statement of Symphony Co and
Sprint company at 30th April, 2009
Symphony Sprint
$000 $000
Revenue 750 400
Cost of
sales (420) (100)
Gross
Profit 330 300
What is
the consolidated gross profit?
Step-1.
Intragroup
sales: $30000 and Profit margin 25% then profit will be $7500 (30000 x 25%)
Step-2
Unrealized profit will be 7500 x 40% = 3000.
Step-3
(330000
+ 300000) – 3000 = $327000
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