Study On Consolidated Scope Of Consolidated Financial Statements

The preparation of consolidated financial statements has long been considered as one of the four accounting dilemmas. With the speeding up of the integrated conglomerates around the whole world, merger activities increases day by day which urgently needs better standards to guide business combination. As IASB and FASB have been devoting themselves to improve the standards of consolidated financial statement, China’s Ministry of Finance promulgated "Enterprise Accounting Standards No.33-Standards for Consolidated Financial Statements" in2014to perfect our standards for consolidated financial statements, which not only draws experience on the standards of consolidated financial statements of IFRS and US GAPP but also combining the reality of China. However, compared to developed countries, further research into the range of the consolidated financial statement is still needed in view of the China’s actual situation. Therefore, the purpose of this paper is to put forward several suggestions on the improvement of current standards by comparing three main consolidation theories and analyzing relevant standards in China’s current Consolidated Financial Statement Standards.The paper includes four chapters and the arrangements and general contents of each chapter are as follows.Chapter one:Introduction. Introduce the research background and significance, the literature review and the structure and content of the paper.Chapter two:Summary of the theories of consolidated financial statements. Analyze three main consolidated statement theories on their respective characteristics aiming at discussing the objective necessity of the choice of the Entity Theory from China’s actual condition.Chapter three:Research on consolidated scope. Study further on the issue of "control" and consolidated scope based on discussing the standards of consolidated financial statements. Chapter four:Suggestions on improving Standards of Consolidated Financial Statements of China. In order to determine the consolidated scope clearly:firstly, we must make clear of the criteria on substantive control and the rules of temporary control; secondly, take the main beneficiaries into account; lastly, define whether or not the structured bodies are included in the consolidated scope.