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

NAO