Steps consolidating foreign subsidiary

16 Feb

Steps for the Actual consolidation: Assumption: The scenario described above is just one of the cases for consolidation when the subsidiary company is in a foreign currency. The COA setup, exchange rate setup and account mapping will differ from customer to customer. As per the scope of AS-23 and AS-27 the application of equity method/proportionate method for consolidation of accounts of associate/ joint ventures respectively is required only when a company prepares consolidation under AS 21 The term ‘group’ has been defined in AS 21 as follows: The explanation to Section 129 (3) clearly states that for the purposes of this sub-section, the word “subsidiary” shall include associate company and joint venture Therefore, as per Section 129 of the Act, 2013 read with rules thereof, consolidation of financial statement is required in case a company is having subsidiary or associate or joint-venture company. As per the rule the consolidation requirement was exempted for a company not having subsidiaries but having associates or joint ventures (‘JVs’).There is another view which believes that CFS is not required if there is no subsidiary as Sec 129 requires consolidation to be done as per AS 21, but as per our view the applicability of CFS is governed by Sec 129 and not AS 21, AS 21 only prescribes the method once CFS is required to be done under any statute. However, the said exemption was only for the financial year 2014-15.AS 21 says that if a company is required to do consolidation then consolidation is required to be done as per criteria set up in AS 21.- Earlier only listed companies was required to do consolidation as listing agreement required the same but with companies act 2013, sec 129 has defines financial statement to include CFS.

steps consolidating foreign subsidiary-7

It’s been almost a month i could not write here as i went busy with work.

Now here is one which i recently worked on for a customer.

In the subsequent paragraphs i will explain how to perform the currency conversion for a subsidiary company operating on a foreign currency and also we will explore how to perform consolidation of this company with the parent company transactions.

First, please navigate to the Organisations section of FUTRLI: Press Add Organisation and then select Create Consolidated Organisation: Name your Organisation, select your Organisation’s currency and Industry Category, and finally the Last Month in your Financial Year: This will create a new Organisation in your Organisation List.

- Before Companies Act 2013, only listed company was required to do Consolidation.