Research On The Consolidation Scope Of Consolidated Financial Statements

Consolidated financial statements can represent comprehensively the financial position, financial performance and cash flows for an enterprise group. Nevertheless, it is the critical factor for a group to determine the reasonable scope of consolidated financial statements so as to show truly and completely an overall picture of an enterprise group. As the issue of consolidated financial statements is becoming complicated and varied, the determination on consolidation scope of consolidated financial statements will turn on the economic development and occurrence of newer problems, and constant supplement and revision will be required. Therefore, the research on the consolidation scope of consolidated financial statements is theoretical and realistic.This essay researches into the consolidation scope of consolidated financial statements. Based on the provisions of consolidation scope in the new accounting standards for business enterprises and comparison with international accounting standards and American accounting standards as well, this essay is oriented to put up some theoretical and practical suggestions for the further improvements on the standards of the consolidated financial statements for the consolidation scope of consolidated financial statements.With comparison with international control, temporary control by definition and quantitative standards, quality standards, and analysis of the limitation of China's enterprises accounting standards in those aspects, thereby this paper proposes some corresponding advice. While determining the consolidation scope of consolidated financial statements, it defines the applicable border for the principles of addition and multiplication, moreover, if legal control criteria are not met. They should be required to further stress on judgment on substance for control standards; subsidiaries should be included in the scope of consolidated financial statements by the parent company's control, which not meet legal control criteria.Through exploring the consolidation scope under the condition of complicated stock-holding, this essay introduces three types of complicated stock-holding, they are multilayer stock-holding, overlapping stock-holding, multilayer and overlapping stock-holding. Analysis is utilized to the reasons why the addition principles are selected for the determination of consolidation scope of consolidated financial statements, and by means of examples, how to apply into practice, moreover, and the exploration is made of the consolidation level under the condition of complicated stock-holding. The disclosure proportion is required of inter-company holdings, so as for the readers of financial statements can get a clear understanding of the internal situation for an enterprise group and make their own judgments.Researches are made into the special issues such as the changes in consolidation scope, the excess loss of subsidiaries in consolidation scope of consolidated financial statements according to the concrete operations of China's listed companies, and how to amendment information on consolidated financial statements in terms of theoretic and practical aspects. Therefore, some corresponding advice is put up; as the same time, researches are made into some companies for the special operating models, for the analysis of their special definition and features, and thereby determination is made on the consolidation scope of consolidated financial statements.