IFRS EN CONSOLIDATIE
CONSOLIDATED FINANCIAL STATEMENTS
Differences between annual accounts ( = statutory accounts) and Consolidated accounts?
Further Financial Analysis
You : investor Euronext – ratio,… + which accounts ( annual, consolidated,…)?
You : employee at Fortis – Bank Loan to buy a new ship for Euronav Tankers : ratio + which accounts
and why ( annual, consolidated,…)?
WHY LEGISLATION ( LA W-MAKING) FOR FINANCIAL REPORTING?
Management accounting internal reporting
Internal use : used by management themselves, to support management in management decision
Detailed and disaggregated information about products, divisions, pants, operations, tasks, individual
Computed by reference to the needs of managers ( tailored to their own needs)
Financial accounting annual accounts
Information for external stakeholders such as shareholders, creditors, public regulators, suppliers,…
Focus on the company as a whole
Made available for public use
Computed by reference to general financial accounting standards
Why legislation ( law-making) for financial reporting? Financial accounting stakeholders
Zie schema ppt
Junction of contractual relations, agreements,… is the company able to deliver?
Financial reporting = information towards external stakeholders:
External stakeholders need to understand the information provided need for accounting standards (
legislation) to provide a frame of reference to interpret and understand the information provided.
Statutory annuel accounts = information towards external stakeholders about:
Solvency ( equity/liabilities,…)
Liquidity ( cashflow, working capital,…)
Profitability ( earnings per share,…)
Of the legal entity ( NV, bvba ( engels : Plc, LLC)
Insufficient for economic groups : activities are spread over multiple legal entities
Consolidated financial statements : economic entity!
Consolidated financial statements = the financial statements of a group in which the assets, liabilities, equity,
income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic
Profitability, solvency, liquidity,… of the economic entity.
Art. 115 : consolidated financial statements provide a true and fair view of assets, financial position and the
results of the group.
ANNUAL ACCOUNTS : INVESTMENTS IN EQUITY INSTRUMENTS – PURPOSE?
Where can we find investments in equity instruments ( equity investments, or the acquiring shares of other
companies = assets) in the annual accounts?
51 – part of the working capital
short term investments of ( temporary) cash surplus – sold within the time span of a year.
28 ( 0/2/4) – classified as non-current assets ( financiële vaste activa)
Non-current assets = resources that are not expected to be consumed or sold within the normal operating
cycle. Non-current assets are acquired by a company to realize her goals in the long term.
Investment in equity instruments ( shares) : non-current assets ( financiële vaste activa)
Insight by means of an example
D’leteren is a Belgian import and distribution company of cars and has a need for transport to get its products
from the port of Antwerp where they arrive by ship towards the multiple selling points in Belgium truck.
3 ways to organize the transport by trucs:
Buy trucs and engage drivers
o Buy trucs : ( D) 24 vehicles @ ( C) 55 bank
o Using the Trucs : each year ( D) 63 Amortisations @ ( C) 24..9 accumulated depreciations
o Drivers : ( D) 62 salaries @ 55 bank
External service provider
o Purchase invoice : ( D) 61 services @ ( C) 55 bank
Engage in one’s own transport company ( separate legal entity)
o Acquiring a subsidiary : ( D) 28 shares @ ( C) 55 bank account
o The subsidiary buys the trucs and becomes the service provider
contrary to an external service provider, we own the company
Shares = voting rights general assembly
General assembly appoints board of directors
Board of directors = policy and decisions
risk related to transport are linked to the legal entity of the ‘subsidiary’
Insight by means of an example
Engage in one’s own transport company
zie schema slide 16
economic activities ( selling products, distribution,…) assets, risks related to these activities or
assets etc. , are spread over a multitude of legal entities…
Criteria : activity, country,….
1 economic group but + 1 legal entities.
Consolidated financial statement reporting at the level of the economic entity, is the economic group
Annual accounts reporting a level of the legal entity.
Zie schema slide 18
Investment in equity instruments ( shares ) non-current assets => points out the existence of an economic
We do not necessarily need 100 % of the voting rights, 50 % + 1 vote ie. The majority of the votings
can be sufficient ( depending on the articles of association) to appoint…
Sometimes with less than the majority decisive power can be obtained…
Sometimes we only want to have influence on policy, instead of a decisive majority…
This will be explained more extensive futher down in the course.
CONSOLIDATED FINANCIAL STATEMENTS 2
DEFINITIONS – PARTICIPATION
Participation and participating interest ( deelneming en deelnemingsverhouding)
Art. 13 – participation : voting rights acquired for the purpose of creating a sustainable and specific relation
with the entity, and to enable the holder to influence the orientation of management decisions.
Presumed ( refutable) to be participation :
1° voting rights representing 10 % or more
2° voting rights representing less than 10 % when :
a) Together with rights held by subsidiaries, represent 10 % or more
b) these rights are subject to commitments from the entity
Uit wetboek vennootschappen. Wanneer boek ik dit als vast actief ? Een deelneming dat gaat een over
stemrechten die men koopt om het specifieke doel om …. .
Art. 14 – companies with a participating interest are companies that are no related ( verbonden) companies :
1° in which a company have a participation directly or through its subsidiairies
2° that, by knowledge of the administrators of the company, have a participating interest in the share capital of
the company directly or through its subsidiaries
3° that, by knowledge of the administrators of the company, are subsidiaries of the company referred to in 2°.
Annual accounts determines classification of the equity instruments to decide classification 280/282/284
1 Consolidated financial statements
1.1 Economic groups
1.2 Why legislation ( law-making) for financial reporting?
1.3 Annual accounts : investments in equity instruments – purpose?
2 Consolidated financial statements 2
2.1 Definitions – participation
2.1.2 Related/ associated
2.2 Obligation for consolidation
2.3 Methods of consolidation
2.4 Percentage of control and interest
2.5 Techniques of consolidation
2.6 Principles of financial statements
3 Full consolidation
3.1 Aggregation of adjusted annual accounts
3.2 Consolidation difference
3.3 Minority interest
3.4 Consolidated results
3.5 Eliminations of intercompany transactions
3.5.1 Eliminations within the balance sheet
3.5.2 Eliminations within the income statements
3.5.3 Eliminations within the balance sheet and income statement
3.5.4 Other consolidation JE
3.6 Consolidation next years
3.7 Preparatory proceedings
4 Proportionate method
4.1 Equity method
5 ifrs / iNTERNATIONAL FINANCIAL REPORTING STANDARDS- IFRS
5.1 IFRS framework
6.1 Presentation of FS ( IAS 1)
6.2 Revenue ( IFRS 15)
6.3 Employee benefits( IAS 19)
6.4 Income taxes and deferred taxes ( IAS 12)
6.5 Property, plan and equipement ( IAS 16)
6.6 Intangible assets ( IAS 38)
6.7 Impairment of assets ( IAS 36)
6.8 Provisions, liabilities, contingent assets & liabilities ( IAS 37)
6.9 Inventories & construction contracts ( IAS 2)
6.10 lEASES ( IFRS 16)
6.11 Financial instruments ( IAS 39 & IAS 32)