Consolidation of Accounts

Previously knowledge acquired within the financial accounting and corporate accounting courses is essential.

The programme will be developed, as far as possible, using active methods that involve student participation and promote a theoretical-practical perspective on the topics and an approach based on know-how. To this end, the explanation of the theoretical and conceptual foundations of the subjects will be combined with the analysis of real cases and the resolution of pedagogical exercises (individually or in groups), constantly appealing to students’ assessments in order to foster reasoning and critical thinking.

It thus includes the following methodologies:

Theoretical-practical teaching: alternating between the presentation of fundamental concepts and theoretical aspects and the completion of practical cases; exemplification with real cases. In addition, the proposed assessment includes group activities that encourage interaction, mutual assistance, consultation of class materials and student research in any medium and its interpretation/application to the class case (e.g., Chat GPT).

Tutorial teaching: clarification of doubts.

Independent study: reading the bibliography and solving recommended exercises.

Course objectives:

O1. Understand the forms of business combinations and the specific information needs of companies’ groups.

O2. Distinguish between types of financial holdings and understand the methods applicable to individual and consolidated financial statements.

O3. Study the concepts, rules, and procedures applicable to prepare the consolidated financial statements, according to the Portuguese Accounting Standards (SNC).

Skills to be acquired:

C1. Understand the motivations for concentration operations and their types.

C2. Be able to identify the different links between companies, resulting from capital holdings, and when a group exists, and the accounting treatment applicable in each case.

C3. Distinguish between individual and consolidated financial information.

C4. Understand the procedure to be followed in the consolidation process and the meaning of specific items in consolidated financial statements.

C5. Know how to distinguish between consolidation for accounting and tax purposes.

Chapter 1 – Introduction of mergers and consolidation

1.1 Business combinations and financial information.

1.2 The groups of companies.

1.3 The consolidation of financial statements – concepts, objectives, advantages and limitations, consolidation theories.

1.4 Consolidatable set and consolidation perimeter – essential concepts.

Chapter 2 – Combinations of business activities

2.1. Concept and identification of a combination of business activities. 

2.2 Rules for application of the purchase method. 

Chapter 3 – Financial investments and applicable methods

3.1 Types of financial investments.

3.2 Methods of accounting for financial investments.

3.3 Consolidation methods.

Chapter 4 – Process of consolidation of financial statements

4.1 Consolidation perimeter – organization chart, mandatory, waivers and exclusions.

4.2 Operations prior to consolidation – temporal, value and monetary homogenization.

4.3 Consolidation procedures – aggregation and eliminations.

4.4 Consolidation of  Financial Statements.

4.5 Consolidation documents.

Chapter 5 – Particular Cases in the application of the Integral Consolidation Method

5.1 Variation in the percentage of participation and control.

5.2 Reciprocal participations.

5.3 The indirect domain – consolidation techniques.

Chapter 6 – Distinction between accounting and tax consolidation

– Concept of group for the purpose of applying the Special Taxation Regime for Groups of Companies and its differentiation from the group for accounting purposes

Frequency regime and assessment methodology:

Attendance at classes is not mandatory but recommended for the proper monitoring and understanding of the subjects taught and the resolution of practical cases in class. Assessment methodology A requires an attendance equal to or greater than 80% of the number of classes in the semester.

Students can choose one of the following assessment methodologies:

A) Periodic evaluation (item b) of art. 13 of the Academic Regulation of the 1st Cycle of Studies of the IPC);

B) Assessment by exam (item c) of art. 13 of the Academic Regulation of the 1st Cycle of Studies of the IPC).

Methodology A - Periodic evaluation

This methodology is based on the combination of the next three evaluation elements:

a) Evaluation activities in the classroom, to do during the semester without telling in which class will be, classified in total for 4 (four) points.

b) Interim written test, to be carried out on 15.11.2024, classified for 6 (six) points, with a maximum duration of 1h30, on a selected part of the subject, indicated to students prior to the test.

c) Exam, classified for 10 (ten) points (corresponding to a part of the exam), to be carried out on the date defined by ISCAC for the regular evaluation period of the academic year 2024|2025, with a maximum duration of 2h00.

The final classification (CF) is obtained by the sum of the classification of the three evaluation elements, being approved students who obtain a classification equal to or greater than 10 (ten) points.

Requirements:

a) This assessment is only applicable to students who have registered for it on the link that will be available on Nonio, until 31.10.2024.

b) It is necessary an attendance equal to or greater than 80% of the number of classes elapsed before the mid-term test and 80% of the total for the semester is required. The justification of absences can only be done through the timely delivery of a written document to the respective teacher, in the cases legally provided for in art. 24 of the Academic Regulation of the 1st Cycle of Studies of the IPC.

c) To maintain this assessment methodology, students need to obtain a minimum grade of 50% of the maximum indicated in the assessment elements a) and b), and 30% in the element c).

d) If students want to withdraw from this assessment methodology and to be assessed 100% by exam, students will have to communicate this decision in writing (email), and sent to the teacher responsible for the curricular unit, no later than December 20, 2024.

Methodology B - Exam 100%

This type of assessment consists of a written test (Exam) about all syllabus, with theoretical, practical and/or theoretical-practical questions, to be carried out on the dates defined by ISCAC, in the regulatory evaluation periods for the academic year 2024| 2025, and with a maximum duration of 2h30m.

The final classification (CF) is obtained by applying the following formula: CF = 100% x Exam

Students who obtain a classification equal to or greater than 10 (ten) points are approved.

Additional information:

1. During resource and special assessment periods, grades are determined exclusively through examinations, which are subject to applicable regulations.

2. In both (periodic and exam 100%) assessment methodologies, an oral exam may be required for grades of 16 points or higher. If the student fails to attend the oral exam, their grade will be reduced to 10 points.

NAO