Chapter 5 Consolidation Following Acquisition Consolidation Following
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Frs 102 Factsheet 6 Business Combinations
FRS 102 FACTSHEET 6 BUSINESS COMBINATIONS Business combinations A business combination is defined as the bringing together of separate entities or businesses into one reporting entity and may be structured in a number of ways for legal, taxation or other reasons. It may involve the purchase by an entity of the equity of another entity, the purchase of all the net assets of another entity, the assumption of the net liabilities of another entity, or the purchase of some of the net assets of another entity that together form one or more businesses. Section 19 Business Combinations and Goodwill sets out the requirements for business combinations. This section also includes the requirements for group reconstructions, however, this is not covered in this factsheet. This factsheet has been prepared to provide a high level overview to entities applying FRS 102 that undertake a business combination for the first time covering the following: • An outline of the purchase method • The separation of intangible assets from goodwill • Illustrative disclosures This factsheet has been prepared by FRC staff and provides high level guidance to entities applying FRS 102 that undertake a business combination for the first time. It should not be relied upon as a definitive statement on the application of the standard nor is it a substitute for reading the detailed requirements of FRS 102. FRS 102 Factsheet 6 1 December 2018 The Purchase Method Key FRS 102 references The purchase method is the required accounting treatment for the vast majority of business 19.6, 19.7 combinations1 and involves the following steps: 1) Identify an acquirer This is the entity which obtains control of other combining entities or businesses. -
Cree, Inc. Non-GAAP Measures of Financial Performance To
Cree, Inc. Non-GAAP Measures of Financial Performance To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, Cree uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP gross margin, non-GAAP operating income, non-GAAP non- operating income, net, non-GAAP net income, non-GAAP diluted (loss) earnings per share and free cash flow. Reconciliation to the nearest GAAP measure of all historical non-GAAP measures included in this press release can be found in the tables included with this press release. In this press release, Cree also presents its target for non- GAAP expenses, which are expenses less expenses in the various categories described below. Both our GAAP targets and non-GAAP targets do not include any estimated changes in the fair value of our Lextar investment. Non-GAAP measures presented in this press release are not in accordance with or an alternative to measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Cree's results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate Cree's results of operations in conjunction with the corresponding GAAP measures. Cree believes that these non-GAAP measures, when shown in conjunction with the corresponding GAAP measures, enhance investors' and management's overall understanding of the Company's current financial performance and the Company's prospects for the future, including cash flows available to pursue opportunities to enhance shareholder value. -
Equity Method Investees — SEC Reporting Considerations
A Roadmap to SEC Reporting Considerations for Equity Method Investees October 2020 This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances. As used in this document, “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP, and Deloitte Financial Advisory Services LLP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Copyright © 2020 Deloitte Development LLC. All rights reserved. Publications in Deloitte’s Roadmap Series Business Combinations Business Combinations — SEC Reporting Considerations Carve-Out Transactions Comparing IFRS Standards -
Defense Industry Consolidation
United States General Accounting Office Testimony GAO Before the Subcommittee on Acquisition and Technology, Committee on Armed Services, U.S. Senate For Release on Delivery Expected at DEFENSE INDUSTRY 2:00 p.m., EST Wednesday, March 4, 1998 CONSOLIDATION Competitive Effects of Mergers and Acquisitions Statement of David E. Cooper, Associate Director, Defense Acquisitions Issues, National Security and International Affairs Division GAO/T-NSIAD-98-112 Mr. Chairman and Members of the Subcommittee: We are pleased to be here this afternoon to discuss issues surrounding consolidation in the defense industry. As mandated by the 1998 Defense Authorization Act we have been reviewing mergers and acquisitions in the defense industry.1 Fifty mergers and acquisitions have occurred in just the last few years. These transactions have raised questions about which defense market areas have been affected and how to preserve competition in these areas. Today, we will provide a brief overview of • consolidation in the defense industry, • approaches to preserving competition in a more concentrated industry, and • the status of Department of Defense (DOD) initiatives to improve its monitoring of competition. After this overview, we will provide details about each of these issues. The sharp decline in spending by DOD since 1985 has resulted in a dramatic Overview consolidation in the defense industry. The defense industry is more concentrated today than at any time in more than half a century. As the single customer for many products of the defense industry, DOD must have the ability to identify and address potential harmful effects of mergers and acquisitions. Questions have been raised about whether the consolidation has gone too far—adversely affecting competition in the industry. -
Preparing a Short-Term Cash Flow Forecast
Preparing a short-term What is a short-term cash How does a short-term cash flow forecast and why is it flow forecast differ from a cash flow forecast important? budget or business plan? 27 April 2020 The COVID-19 crisis has brought the importance of cash flow A short-term cash flow forecast is a forecast of the The income statement or profit and loss account forecasting and management into sharp focus for businesses. cash you have, the cash you expect to receive and in a budget or business plan includes non-cash the cash you expect to pay out of your business over accounting items such as depreciation and accruals This document explores the importance of forecasting, explains a certain period, typically 13 weeks. Fundamentally, for various expenses. The forecast cash flow how it differs from a budget or business plan and offers it’s about having good enough information to give statement contained in these plans is derived from practical tips for preparing a short-term cash flow forecast. you time and money to make the right business the forecast income statement and balance sheet decisions. on an indirect basis and shows the broad categories You can also access this information in podcast form here. of where cash is generated and where cash is spent. Forecasts are important because: They are produced on a monthly or quarterly basis. • They provide visibility of your future cash position In contrast, a short-term cash flow forecast: and highlight if and when your cash position is going to be tight. -
Consolidation Accounting
Investment entities Consolidation accounting 8 January 2015 Intermediate investment entities are the focus of these narrow-scope IFRS amendments Highlights − Consolidation of intermediate investment entities − Consolidated financial statements exemption for intermediate parents owned by investment entities − Policy choice for equity accounting for interests in investment entities Mike Metcalf − Effective date – Annual periods beginning on or after 1 January 2016 Partner KPMG LLP (UK) New requirements for investment entities to use fair value accounting came into effect in early 2014, but early adoption had already highlighted a series of application issues. In response, on 18 December 2014 the IASB issued Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28), which addresses three separate issues. 1. Intermediate investment entities Should these entities be consolidated? The extent of fair value accounting, rather than consolidation of subsidiaries, has been amended and is now as follows. Subsidiary does not Subsidiary provides provide investment- investment-related related services services Non-investment entity Fair value Consolidated subsidiary Investment entity Fair value Fair value subsidiary Before the amendment, it was unclear how to account for an investment entity subsidiary that provides investment-related services. © 2016 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved. 2 | Investment entities – Consolidation accounting As a result of the amendment, intermediate investment entities are not permitted to be consolidated. So where an investment entity’s internal structure uses intermediates, the financial statements will provide less granular information about investment performance – i.e. less granular fair values of, and cash flows from, the investments making up the underlying investment portfolio. -
Close, Consolidate and Report
Close, Consolidate and Report Point of view on Enabling Technologies December 2016 © 2016 Deloitte The Netherlands 1 Introduction Finance Organization of the future Wheel of Finance The future of Finance: As we look at What does the future hold for the the future of Finance, it’s important to Finance function? Today’s Finance consider two things: How Finance organizations are more then ever under delivers value to the organization, and pressure to deliver value to the business what enables the Finance function to do and in parallel operate within a highly so. cost-efficient and most-effective delivery model. The introduction of new Digital How Finance delivers value: In our technologies is likely to be the view, Finance delivers value through most important factor impacting the three types of services: Operational Finance function. Finance, Business Finance and Specialized Finance. Think transactional, Digital technologies radically transform strategic and highly specialized. how the business and it’s Finance function delivers value. Digital Finance What enables Finance: Underpinning utilizes disruptive technology, data, these three services are what we call innovation, and people to elevate and Finance enablers. These enablers differentiate the capabilities of the include the organizational structure and Finance function. Digital requires the Finance team’s talent; the organizations to think and act differently information, systems and data available in order to generate value. to the Finance group, and the processes and policies that enable the Finance The ability of CFOs to leverage Digital team to monitor risk and stay on top of technologies to position their future regulatory obligations. Finance function will determine the future of their organizations. -
The Cost of the Consolidation Option for Direct and Guaranteed Student
CONGRESS OF THE UNITED STATES CONGRESSIONAL BUDGET OFFICE A CBO PAPER MAY 2006 The Cost of the Consolidation Option for Student Loans Pub. No. 2691 A CBO PAPER The Cost of the Consolidation Option for Student Loans May 2006 The Congress of the United States O Congressional Budget Office Preface Federal student loans provide borrowers with options to modify the terms of those loans after origination. One option allows borrowers to consolidate their loans, combining individ- ual loans into a single obligation and converting from a variable interest rate to a fixed rate that is based on a short-term interest rate. Under that consolidation option, borrowers also have more flexibility to extend the term to maturity of their loans. The option to convert a variable-rate loan into a fixed-rate loan at the prevailing variable rate conveys a substantial benefit to borrowers and imposes a corresponding cost on the govern- ment and taxpayers, which is difficult to assess using conventional budgeting techniques. This paper—prepared in response to a request from the Honorable Jim Nussle, Chairman of the House Budget Committee, and the Honorable John Boehner, former Chairman of the House Education and the Workforce Committee—uses options-pricing methods to estimate the cost of the consolidation option. In keeping with CBO’s mandate to provide objective, impartial analysis, the report makes no recommendations. Steven Weinberg and Damien Moore prepared the paper under the supervision of Robert Dennis and Marvin Phaup. Nabeel Alsalam, Chad Chirico, Paul Cullinan, Deborah Kalcevic, Angelo Mascaro, Bill Randolph, and Judy Ruud of CBO offered many helpful comments. -
Consolidated Financial Statements
332 Accounting Standard (AS) 21 Consolidated Financial Statements Contents OBJECTIVE SCOPE Paragraphs 1-4 DEFINITIONS 5-6 PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS 7-8 SCOPE OF CONSOLIDATED FINANCIAL STATEMENTS 9-12 CONSOLIDATION PROCEDURES 13-27 ACCOUNTING FOR INVESTMENTS IN SUBSIDIARIES IN A PARENT’S SEPARATE FINANCIAL STATEMENTS 28 DISCLOSURE 29 TRANSITIONAL PROVISIONS 30 Consolidated Financial Statements 307 Accounting Standard (AS) 21 Consolidated Financial Statements1 (This Accounting Standard includes paragraphs set in bold italic type and plain type, which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting Standard should be read in the context of its objective and the General Instructions contained in part A of the Annexure to the Notification.) Objective The objective of this Standard is to lay down principles and procedures for preparation and presentation of consolidated financial statements. Consolidated financial statements are presented by a parent (also known as holding enterprise) to provide financial information about the economic activities of its group. These statements are intended to present financial information about a parent and its subsidiary(ies) as a single economic entity to show the economic resources controlled by the group, the obligations of the group and results the group achieves with its resources. Scope 1. This Standard should be applied in the preparation and presentation of consolidated financial statements for a group of enterprises under the control of a parent. 2. This Standard should also be applied in accounting for investments in subsidiaries in the separate financial statements of a parent. 3. In the preparation of consolidated financial statements, other Accounting Standards also apply in the same manner as they apply to the separate 1It is clarified that AS 21 is mandatory if an enterprise presents consolidated financial statements. -
Reading and Understanding Nonprofit Financial Statements
Reading and Understanding Nonprofit Financial Statements What does it mean to be a nonprofit? • A nonprofit is an organization that uses surplus revenues to achieve its goals rather than distributing them as profit or dividends. • The mission of the organization is the main goal, however profits are key to the growth and longevity of the organization. Your Role in Financial Oversight • Ensure that resources are used to accomplish the mission • Ensure financial health and that contributions are used in accordance with donor intent • Review financial statements • Compare financial statements to budget • Engage independent auditors Cash Basis vs. Accrual Basis • Cash Basis ▫ Revenues and expenses are not recognized until money is exchanged. • Accrual Basis ▫ Revenues and expenses are recognized when an obligation is made. Unaudited vs. Audited • Unaudited ▫ Usually Cash Basis ▫ Prepared internally or through a bookkeeper/accountant ▫ Prepared more frequently (Quarterly or Monthly) • Audited ▫ Accrual Basis ▫ Prepared by a CPA ▫ Prepared yearly ▫ Have an Auditor’s Opinion Financial Statements • Statement of Activities = Income Statement = Profit (Loss) ▫ Measures the revenues against the expenses ▫ Revenues – Expenses = Change in Net Assets = Profit (Loss) • Statement of Financial Position = Balance Sheet ▫ Measures the assets against the liabilities and net assets ▫ Assets = Liabilities + Net Assets • Statement of Cash Flows ▫ Measures the changes in cash Statement of Activities (Unaudited Cash Basis) • Revenues ▫ Service revenues ▫ Contributions -
Equity Method and Joint Ventures Topic Applies to All Entities
A Roadmap to Accounting for Equity Method Investments and Joint Ventures 2019 The FASB Accounting Standards Codification® material is copyrighted by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116, and is reproduced with permission. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication. As used in this document, “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP, and Deloitte Financial Advisory Services LLP, which are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of our legal structure. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2019 Deloitte Development LLC. All rights reserved. Other Publications in Deloitte’s Roadmap Series Business Combinations Business Combinations — SEC Reporting Considerations Carve-Out Transactions Consolidation — Identifying a Controlling Financial Interest -
FINANCIAL STATEMENTS by Michael J
CHAPTER 7 FINANCIAL STATEMENTS by Michael J. Buckle, PhD, James Seaton, PhD, and Stephen Thomas, PhD LEARNING OUTCOMES After completing this chapter, you should be able to do the following: a Describe the roles of standard setters, regulators, and auditors in finan- cial reporting; b Describe information provided by the balance sheet; c Compare types of assets, liabilities, and equity; d Describe information provided by the income statement; e Distinguish between profit and net cash flow; f Describe information provided by the cash flow statement; g Identify and compare cash flow classifications of operating, investing, and financing activities; h Explain links between the income statement, balance sheet, and cash flow statement; i Explain the usefulness of ratio analysis for financial statements; j Identify and interpret ratios used to analyse a company’s liquidity, profit- ability, financing, shareholder return, and shareholder value. Introduction 195 INTRODUCTION 1 The financial performance of a company matters to many different people. Management is interested in assessing the success of its plans relative to its past and forecasted performance and relative to its competitors’ performance. Employees care because the company’s financial success affects their job security and compensation. The company’s financial performance matters to investors because it affects the returns on their investments. Tax authorities are interested as well because they may tax the company’s profits. An investment analyst will scrutinise a company’s performance and then make recommendations to clients about whether to buy or sell the securities, such as shares of stocks and bonds, issued by that company. One way to begin to evaluate a company is to look at its past performance.