If a listed company has such related transactions with its parent company, subsidiaries or other companies controlled by the same parent company, it will encounter the problem of how to offset these transactions when compiling the consolidated statements of the group with the listed company as its parent company or subsidiary. Through the author's research, due to the particularity of accounting treatment, the offset method of this kind of transaction is different from that of general internal transactions, and the offset method is not the same for related parties with different relationships and different types of related transactions.
The following respectively discuss the offset of two typical related party transactions under the three relationships of listed companies and parent companies, brother companies and subsidiaries. (Note: The following discussion does not mention the basic offset entries such as long-term equity investment of the parent company and net assets of subsidiaries, investment income of the parent company and net profit of subsidiaries. )
I. When a listed company has related transactions with its parent company, it shall prepare a consolidated statement of the parent company (omitted).
Suppose S is a listed company and P is the parent company of S, holding S60%% shares.
1. The affiliated company shall bear the expenses for the listed company.
Example 1: P pays advertising fee on behalf of s 1000. According to the above documents, both parties make the following accounting treatment:
P: Borrow: non-operating expenses? 1000
Loan: bank deposit? 1000
Debit: Operating expenses 1000.
Loan: capital reserve-related party transaction price difference 1000
At the same time, due to the increase of S capital reserve 1000, P should also use the equity method to make accounting entries:
Borrow: long-term equity investment -S 600
Loan: capital reserve-equity investment reserve 600.
When preparing the group consolidated statement with P as the parent company, the items related to this related party transaction that are still kept in the group consolidated statement after normally offsetting P's long-term equity investment, investment income and S's net assets and net profit are as follows:
(1) non-operating expenses 1000 (from p);
(2) Operating expenses 1000 (from S);
(3) Capital reserve 600 (from P).
Obviously, no matter who pays this advertising fee, it is a sales expense for the whole group, so item (2) should not be reduced. (1) and (3) are both items generated by intra-group transactions and should be offset, but the amounts of the two items are inconsistent and should be offset in this way.
Listed companies benefited from this related party transaction 1000. Although it cannot be reflected in the income statement, it still increases its net assets in the form of capital reserve, so the rights and interests enjoyed by minority shareholders of listed companies will increase in proportion. The difference of 400 between the above-mentioned non-operating expenses and capital reserve is actually the part enjoyed by minority shareholders in this part of excess interest, which has been included in the "minority shareholders' equity" in the consolidated statement. Therefore, if you want to offset all non-operating expenses and capital reserve, you must make the following entries:
Method 1:
Debit: capital reserve 600
Borrow: minority shareholders' equity 400
Loan: non-operating expenses (P) 1000
Another method is to retain minority shareholders' rights and interests and part of non-operating expenses, and only write off all capital reserves:
Method 2:
Debit: capital reserve 600
Loan: non-operating expenses (P)? 600
The first method offsets all items, which is equivalent to the listed company paying its own advertising fees. The second method does not completely offset the transaction content, and the remaining influence can be expressed in the form of entries as follows:
Debit: non-operating expenses 400
Loan: minority shareholders' rights and interests? celebrity
According to international accounting standards, the profits generated by internal transactions should be completely offset, but it is not clear whether the offset profits should be shared by group shareholders and minority shareholders in proportion. At present, the international practice is that group shareholders and minority shareholders share this part of the offset in proportion, so the result of the offset is equivalent to the fact that the business has never happened.
However, the domestic practice is that the group shareholders all bear the offset amount and do not offset the profits and losses and rights of minority shareholders. Therefore, in the case of positive internal trading profit, the consolidated net profit after offset is reduced compared with that without trading (the reduced part is equivalent to the offset amount that minority shareholders should bear).
According to international accounting standards, the first method should be adopted to offset the influence of related party transactions. However, the author believes that from the perspective of the shareholders of the parent company P, when S is not a wholly-owned subsidiary of P, there is a difference between S and P in paying advertising fees. If S pays, S's minority shareholders will bear part (400) and the rest (600) in proportion. But paying by P means that all expenses (1000) must be borne by the shareholders of the group. The first offset method can not reflect this difference, nor can it objectively reflect the rights and interests enjoyed by minority shareholders, so the author prefers the second method.
(Only the second method is adopted in the following discussion. )
2. Listed companies sell goods to affiliated companies.
Example 2: S sells a batch of products to P at a price of 10000, a cost of 8000, and a fair price of 9000, assuming that not all products are sold to the outside world in the current period. The accounting treatment of both parties is as follows (excluding tax):
Student:
Borrow: Bank deposit? 10000
Loan: income from main business is 9000 yuan.
Loan: capital reserve-related party transaction price difference? 1000
Borrow: the main business cost is 8000 yuan.
Loan: inventory? 8000
p:
Debit: Inventory 10000
Loan: bank deposit? 10000
Borrow: long-term equity investment -S 600
Loan: capital reserve-equity investment preparation? 600
Offset entry of related party transaction:
Borrow: income from main business? 9000
Debit: capital reserve 600
Loan: main business cost? 8000
Credit: Inventory (P) 1600
After offset by the above methods, the impact of internal inventory sales on consolidated statements is as follows:
Debit: Inventory (P) 400
Loan: minority shareholders' rights and interests? celebrity
(If the first method is adopted, you only need to make the opposite entry to offset the above effects. )
This influence can be understood as follows: 40% of the excess interest earned by S from P is enjoyed by S's minority shareholders, so this intra-group inventory transfer increases the inventory cost by 400%.
II. Related party transactions of listed companies and their subsidiaries, and preparation of consolidated statements of listed companies (omitted).
Suppose P is a listed company, S is a subsidiary of P, and P holds 60% of S shares.
1. The subsidiary shall bear the expenses on behalf of the parent company.
Example 3: S pays the advertising fee 1000 on behalf of P, and both parties shall make the following accounting treatment:
Student:
Debit: non-operating expenses 1000
Loan: bank deposit 1000.
p:
Debit: Operating expenses 1000.
Loan: capital reserve-related party transaction price difference? 1000
When preparing the consolidated income statement, the following offsets should be made:
Debit: capital reserve 1000
Loan: non-operating expenses (P) 1000
After offset by the above method, the impact of this related party transaction on the consolidated statement is as follows:
Borrow: minority shareholders' rights and interests? celebrity
Loan: profit and loss of minority shareholders 400
(If the first method is adopted, you only need to make the opposite entry to offset the above effects. )
This influence can be understood as follows: because the non-wholly-owned subsidiary bears the expenses on behalf of the parent company, the minority shareholders' rights and interests and profits and losses of the subsidiary decrease.
2. The parent company sells goods to its subsidiaries.
Example 4: P sells a batch of products to S at a price of 10000, a cost of 8000, and a fair price of 9000, assuming that not all products are sold to the outside world in the current period. The accounting treatment of both parties is as follows (excluding tax):
p:
Debit: bank deposit 10000
Loan: income from main business is 9000 yuan.
Loan: capital reserve-related party transaction price difference? 1000
Borrow: the main business cost is 8000 yuan.
Loan: inventory? 8000
Student:
Debit: Inventory 10000
Loan: bank deposit 10000.
When preparing the consolidated income statement, the following offsets should be made:
Borrow: main business income (P)? 9000
Debit: capital reserve 1000
Loan: main business cost (P)? 8000
Loan: inventory? 2000
After offset by the above method, since this batch of inventory has not been sold to the outside world, this related party transaction has no influence on the consolidated statement of the current period, but it will affect minority shareholders' rights and interests and profits and losses during the external sales period.
Three. For related transactions between listed companies and other companies controlled by their parent companies, the consolidated statements of the group shall be prepared (omitted).
Assume that S 1 and S2 are both subsidiaries of P, where S2 is a listed company, and P holds 60% of S1and 70% of S2.
1. Brother companies bear the expenses for listed companies.
Example 5: S 1 paid advertising fee on behalf of S2 1000, and both parties made the following accounting treatment:
S 1:
Debit: non-operating expenses 1000
Loan: bank deposit 1000.
S2:
Borrow: Operating expenses? 1000
Loan: capital reserve-related party transaction price difference? 1000
At the same time, for S2 equity accounting, P should make the following entries:
Borrow: Long-term equity investment -2700
Loan: capital reserve-equity investment reserve 700
When preparing the consolidated income statement, the following offsets should be made:
Borrow: capital reserve (P)? 700
Loan: non-operating expenses (S 1)? 700
After offset by the above method, the impact of related party transactions on consolidated statements is as follows:
Debit: non-operating expenses (S 1) 300
Borrow: minority shareholders' equity (S 1)? celebrity
Loan: minority shareholders' equity (S2)? 300
Loan: profit and loss of minority shareholders (S 1)? celebrity
(If the first method is adopted, you only need to make the opposite entry to offset the above effects. )
This influence can be understood as the different shareholding ratio of P to S 1 and S2, and the corresponding rights and interests of minority shareholders of S 1 and S2 are also different. Therefore, from the perspective of the parent company of the group, compared with S2' s own payment, the amount borne by minority shareholders is different, so the influence on the shareholders of the parent company is also different. In this case, the profit flows from the subsidiary with low shareholding ratio to the subsidiary with high shareholding ratio, which increases the net profit and net assets of the consolidated statement 100.
2. Listed companies sell goods to brother companies.
Example 6: S2 sells a batch of products to S 1 at a price of 10000, with a cost of 8000 and a fair price of 9000. It is assumed that all these products will not be sold in the current period. The accounting treatment of both parties is as follows (excluding tax):
S2:
Debit: bank deposit 10000
Loan: income from main business? 9000
Loan: capital reserve-related party transaction price difference? 1000
Borrow: the main business cost? 8000
Credit: 8000 in stock
S 1:
Debit: Inventory 10000
Loan: bank deposit? 10000
At the same time, for S2 equity accounting, P should make the following entries:
Borrow: Long-term equity investment -2700
Loan: capital reserve-equity investment reserve 700
When preparing the consolidated income statement, the following offsets should be made:
Debit: main business income (S2) 9000.
Borrow: capital reserve 700
Loan: main business cost (S2) 8000.
Inventory (S 1) 1700
After offset by the above methods, the impact of internal inventory sales on consolidated statements is as follows:
Debit: inventory (S 1)? 300
Loan: minority shareholders' equity (S2)? 300
(If the first method is adopted, you only need to make the opposite entry to offset the above effects. )
This influence can be understood as follows: 30% of the related party transaction benefits obtained by S2 from S 1 are enjoyed by S2' s external shareholders, so this intra-group inventory transfer increases the inventory cost by 300%.
Consolidation of accounting statements: refers to the statements prepared by the parent company, including the relevant data of accounting statements of all holding subsidiaries. This report can provide users with the financial status and operating results of the company group.
That is to say, it is based on the accounting entity composed of the parent company and its subsidiaries, and the individual financial statements compiled by the holding company and its subsidiaries, which reflect the consolidated financial position and operating results after offsetting the current accounts within the group. Consolidated statements include consolidated balance sheet, consolidated income statement, consolidated cash flow statement or consolidated statement of changes in financial position, etc.
Generally speaking, there are three theories to follow in compiling consolidated accounting statements, namely, parent company theory, subject theory and contemporary theory; There are two methods to choose from, namely, purchase method and equity combination method. In practice, the revised contemporary theory is often used.
With the widespread existence of minority equity in many countries, the problem of dealing with minority equity in consolidated accounting statements also follows, which leads to different understandings of the scope of merger and related issues, and then forms three merger theories.
First, the parent company theory. According to the parent company theory, the shareholders in the enterprise group only include the shareholders of the parent company, excluding the minority shareholders of the subsidiaries, and are regarded as the external creditors of the main body of the company group. Shareholders' equity in the consolidated balance sheet prepared by this accounting entity and net profit in the consolidated income statement only refer to the part owned and obtained by the parent company, and the consolidated accounting statement is regarded as the extension and expansion of the accounting statement of the parent company.
Second, the theory of substance. Entity theory holds that all shareholders in an enterprise group are treated equally, and both major shareholders and minor shareholders are shareholders in the group, without overemphasizing the rights and interests of shareholders in the holding company. The consolidated accounting statements compiled by this theory can meet the management needs of the whole production and operation activities in the enterprise group.
Third, contemporary theory is actually a mixture of parent company theory and entity theory. American GAAP adopts contemporary theory, so it is widely used in American practice.
Because the contemporary theory absorbs part of the parent company theory and the entity theory, it lacks internal consistency. Although the contradiction in the application of accounting concepts in the parent company theory is avoided, there is still a problem of inconsistent pricing in the valuation of consolidated net assets.