Research On Consolidated Accounting Treatment Of The Group Internal Investment

A group is a new-type economic entity formed through controlling stock rights, it is a complex accounting subject consisting of several accounting subjects, to present the financial position, the results of operations, and changes in cash flows of the group, a non-traditional accounting method is needed, that is the consolidated statement. The preparing of the consolidated statement is based on the statements of the parent and each of its subsidiaries, and a worksheet is usually needed. The difficulties concentrate on the elimination and adjustment of relevant projects between companies in the group. There are two kinds of these projects mainly, one is from investment, such as parent's long-term equity investment and subsidiary's equity, parent's investment return and subsidiary's split of the profit, and these are the most basic, essential contents in the consolidated statement. These projects usually take place between companies with investment relationship. The other is the inter-company transaction in the group, mainly including internal purchase and sell, internal fixed assets trade, internal credit and debt etc. These transactions may take place between the parent and its subsidiary, and may take place between the subsidiaries without investment relation too. In this thesis only the first is studied, and the investment is divided into equity investment and bond investment. In both parts, basic elimination and adjustment are recommended firstly, and then from the superficial to the deep, special problems existing in the realistic economic life are drawled out to study.In the first part of this thesis, the theory foundation and methods of accounting treatment of consolidated statement are introduced, which offer the research behind with a theory foreshadowing. The equity investment is studied by different holdingforms, namely: Single layer control, multilevel control and multilevel-crossed control. The part of bond investment probes into the consolidated method of the inferred profit or lose of redeemed bonds, especially when they are redeemed from the market (outside the group). By analyzing, drawing lessons from existing four theories, namely: parent theory, investor theory, agency theory, and face-value theory, a brand-new theory named modified face-value theory is put forward. At the end of the thesis, the author has proposed some policies to the standard of consolidated statement that will issued soon, hoping them helpful for the formulation of standard.