Research On The Change Of Consolidation Scope Based On Control Judgment

In 2006,the Ministry of Finance issued "Accounting Standards for Enterprises No.33-Consolidated Financial Statements(CAS33 for short)",and announced that the criterion would perform on January 1,2007.In 2014,the Ministry of Finance issued the revised version of Accounting Standards for Enterprises No,33-Consolidated Financial Statements,and announced the revised version would perform on July 1,2014.The revised version of CAS33 provides a detailed explanation of the definition of "control".The revised CAS33 describes the scope of consolidation in more detail.The revised CAS33 draws lessons from the international accounting standards and puts forward three elements of control.Although the revised CAS3 3 broadens the scope of consolidation and improves the definition of control,in practice,there are still some problems in the definition of control and the determination of the scope of consolidation.After a lot of literature research,this paper finds that the existing financial workers still have great divergence on the judgment of substantive control.There are many cases in which some enterprises modify financial statements by transferring control rights through equity transactions.As pointed out in the annual report of listed companies issued by the CSRC in 2015,there are still many disputes in the practice of judging the scope of consolidation by "control".The scope of consolidation refers to which member enterprises should incorporate into a group enterprise's consolidated financial statements,and the confirmation of the scope of consolidation plays a vital role in the process of compiling consolidated statements.The research on the scope of consolidation is not only crucial for parent company and subsidiary company,but also focuses on the scope of consolidation for users of financial statement information.The definition of consolidation scope directly affects the accuracy and information usefulness of consolidated financial statements.Therefore,the correct definition of consolidation scope is the basis for the correct preparation of consolidated financial statements.Our country's criteria on the scope of consolidation have also undergone constant revision and improvement.The definition of consolidation scope has always been a hot topic in the field of accounting.Firstly,based on the theory of CAS33,this paper specifically analyses the definition of "control" in the revised version of CAS33 and the criteria for judging whether to have "control".Combined with the three merger theories,ownership theory,entity theory and parent company theory,this paper focuses on the application of merger theory in China,and then analyses the impact of different merger theories on consolidated statements.Furthermore,it further analyses the differences in the scope of groups,the calculation of goodwill and the status of minority shareholders under different merger theories.The paper's unfolding lays the groundwork for the background.Secondly,starting from the actual needs of enterprises,this paper chooses the frequent equity transactions that lead to the change of equity proportion in enterprises as the starting point,focusing on the analysis of Sanan integration,a wholly-owned subsidiary of Sanan Optoelectronics,and the establishment of a joint venture company SananHuanyu with Huanyu,and transferring its 2%equity in SananHuanyu within less than two years at a price of$80,000.To Huanyu.After the transfer,Sanan integrated holds 49%of SananHuanyu's equity,and SananHuanyu will no longer be included in the scope of the Sanan Optoelectronics's consolidated statements.This case is to analyze the motivation and trading situation of Sanan Optoelectronic only transferring 2%of its equity to lose control.Thirdly,it combs the impact of the transfer of control rights on individual statements and consolidated financial statements.Finally,this paper focuses on the matters not clearly stipulated in China's accounting standards,but also the most problematic areas in China's enterprise accounting practice,and explores the basis for judging the transfer of control rights of listed companies.Based on the study of merger theory and China's accounting standards,combined with the relevant information collected by the author,the author believes that the control right cannot be judged simply by the proportion of shareholding,but should focus on the motivation of equity trading.Different definitions of control rights can modify financial statements.With the international convergence of China's accounting standards,the cost of accounting information supply has increased significantly,which requires higher quality of accounting personnel.This paper studies LED lighting enterprises,and the content is innovative.What's more,the author separately analyzes the impact of the two situations of no loss of control right and loss of control right on the consolidated statements,and the analysis method is novel.The article combines real cases to enhance readability.Through case analysis,referring to the previous research results and the characteristics of the case itself,this paper tries to give corresponding suggestions,which is of great significance for Chinese conglomerates to correctly comply with the revised CAS33.