Consolidated Financial Statements Of The Scope Of Consolidation

Consolidation is one of the difficult problems in financial accounting field. The hypothesis of consolidation is to identify consolidated areas reasonably. In this essay, the author refers to domestic and foreign research results and integrates with the situation in China to discuss the regulations of consolidated areas in U.S., U.K. and IASC; argue and point out a few questions in Chinese consolidated areas principals. Moreover, the author analyzes some special questions which including control shares overlapped and crisscross; irregular diction on 'equity shares over half'; primary and secondary sequence of quantity standards and quality standards in consolidated areas; whether subsidiaries who operate continuously but insolvency can be consolidated; whether subsidiaries who have different operation scopes can be consolidated; consolidated areas whether including management on a commission basis, management on a contract basis and management on a lease basis; whether joint ventures can be consolidated and some Special Purpose Entity (SPE) consolidation problems. On the base of mentioned above, the author gives some suggestions about formulating Chinese consolidation principals. The essay can be classified as five parts. The background and meaning of selecting this topic is showed at the first part. At the following part, the author combines Chinese related regulations and compare them between China and other countries on the base of focus on researching related consolidated areas regulations in those countries that have influence in the world. At the third part, based on Chinese practice, the author points out shortcomings of existing regulations and particular analyze some special problems in consolidated areas. SPE consolidation, which argued many times in international academic circles, is settled at the forth part. At this part, the author also introduces development history of SPE in America and IASC in order to offer an example for China. At the last part, the author gives some advices on identifying principals of Chinese consolidated areas on the bases of researches mentioned above.