Following part I - Consolidated Financial Statements Overview, today we learn about the difference between consolidated and separate reports. The purpose is to make it easier for us to prepare the consolidated financial statements when we already know how to prepare separate reports.

There are many ways to classify this differs depending on the purpose of use and research on the consolidated financial statements. This topic deals with the difference in "Form" for preparing consolidated financial statements.

We consider three parts of the financial statements including:

• Balance sheet,
• Income statement,
• Cash flow Statement.

The balance sheet has two differences. They are two additional items:

• 01. “Goodwill” in the assets section is “the difference between the cost of an investment and the net fair value of the identifiable assets of the subsidiary at the acquisition date."
• 02. “The non-controlling interest” in the capital section is “determined based on the interest percentage of non-controlling shareholders and the profit after corporate income tax of subsidiaries”.

The income statement has three differences. They are three additional items:

• 01. “Share in profits of associates” is to reflect the profit or loss owned by the investor in profit or loss of the joint venture or associate when the investor using the equity method.
• 02. “Net profit after tax of the parent” is to reflect the value of the profit after tax of the parent shareholder.
• 03. “Profit after tax of non-controlling shareholders” is to reflect the value of profit after tax of non-controlling shareholders.

Finally, the preparation principles for the Cash Flows Statement. There are two differences that indirectly affect the form.

• 01. The consolidated cash flows statement only reflects cash flows arising between the group and entities outside the group, not reflect internal cash flows arising between the parent company and its subsidiaries, among subsidiaries.
• 02. Cash flows from business activities are prepared by the indirect method on the basis of using the consolidated income statement and the consolidated balance sheet and adjusted for subsidiary acquisition or liquidation transactions:

When a subsidiary is acquired, or sold in the year, the opening and closing numbers of the Consolidated Balance Sheet will be inconsistent.

The beginning balance of the Consolidated Balance Sheet will include the figure of the subsidiary that was liquidated in the year but not include the ending balance.

On the contrary, the beginning balance of the consolidated balance sheet does not include the figures of subsidiaries acquired in the year but does include the ending balance.

During the calculation process, it is necessary to make appropriate adjustments to the beginning balance as follows:

• Add the balance of assets and liabilities of the subsidiary acquired in the period according to the data at the time of acquisition.

Exclude the balance of assets and liabilities of subsidiaries sold in the period according to the data at the time of liquidation.