Equity Investments and Financial Statement Consolidation

The development of the syllabus will be carried out, as much as possible, using active methods, which involve student participation and the
promotion of 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), making a constant appeal to students’ assessments, to encourage reasoning and critical thinking.
It therefore includes the following methodologies:
Theoretical-practical teaching: alternating between the exposition of fundamental theoretical concepts with practical exercises;
exemplification with real cases. Furthermore, the proposed assessment includes group activities that encourage interaction, mutual help,
consultation of class materials and student research in any form and their interpretation/application to the class case (e.g., GPT Chat).
Tutorial teaching: clarification of doubts.
Autonomous study: reading the bibliography and solving recommended exercises.

The course unit has the following Learning Outcomes (LOs):

LO1 – Understand the role of equity investments as instruments of investment, financing and corporate control, identifying the different forms of relationships between entities.

LO2 – Distinguish between the different types of equity investments and apply the corresponding accounting and measurement methods in separate and consolidated financial statements.

LO3 – Understand the different forms of business combinations and the establishment of corporate groups, identifying their implications for the preparation and interpretation of financial information.

LO4 – Apply the technical procedures required for the preparation of consolidated financial statements, including the definition of the consolidation perimeter, harmonisation procedures and consolidation eliminations.

LO5 – Prepare and interpret consolidated financial statements and distinguish between accounting consolidation and tax consolidation, identifying their respective objectives and implications for the financial reporting of corporate groups.

The competencies (C) to be developed by students are as follows:

C1 – Identify the different types of financial interests and forms of relationships between entities, distinguishing situations of control, joint control and significant influence.

C2 – Apply the appropriate accounting and measurement methods for different financial interests in individual and consolidated financial statements.

C3 – Perform consolidation procedures, including the definition of the consolidation scope, standardisation procedures, eliminations and the preparation of consolidation documents.

C4 – Prepare and interpret consolidated financial statements, analysing the financial position, performance and economic structure of business groups to support decision-making.

C5 – Distinguish between the procedures and objectives of accounting consolidation and tax consolidation, identifying their respective implications for the financial reporting of business groups.

C6 – Exercise professional judgement in the application of accounting standards and communicate financial information accurately, ethically, technically soundly, and through the responsible use of sources, data and digital tools.

C7 – Develop collaborative work skills and assume individual responsibility for the justification of methods, sources, calculations and conclusions, demonstrating autonomy and critical thinking.

P1 – Equity investments and accounting methods

1.1 Objectives and importance of equity investments.

1.2 Types of equity investments.

1.3 Control, joint control and significant influence.

1.4 Accounting and measurement methods in separate and consolidated financial statements.

P2 – Business combinations and corporate groups

2.1 Business combinations.

2.2 Corporate groups.

2.3 Financial statement consolidation: concepts, objectives, advantages, limitations and theories.

2.4 Consolidated group and consolidation perimeter.

P3 – Business combinations

3.1 Concept and identification of a business combination.

3.2 Acquisition method.

P4 – Financial statement consolidation process

4.1 Consolidation perimeter: mandatory consolidation, exemptions and exclusions.

4.2 Pre-consolidation procedures: temporal, measurement and currency harmonisation.

4.3 Consolidation procedures: aggregation and eliminations.

4.4 Consolidated financial statements.

4.5 Consolidation working papers.

P5 – Special cases in financial statement consolidation

5.1 Changes in ownership interest and control.

5.2 Reciprocal shareholdings.

5.3 Consolidation techniques under indirect control.

P6 – Accounting consolidation and tax consolidation

6.1 Distinction between accounting consolidation and tax consolidation.

NAO