Business Groups Accounting

Financial Accounting

Exposition and resolution of practical cases

The aim of this curricular unit is to transmit to students the concepts and accounting procedures related to financial investments, the concentration of business activity and the consolidation of financial statements. Therefore, students should:

– know how the different types of financial investments should be accounted for;

– what is a business combination and the method of accounting to be applied when an entity enters into a combination;

– understand the importance and usefulness of consolidated financial statements as a source of information for decision making.

– define the consolidation perimeter and identify situations of mandatory and waiver of presentation of consolidated accounts;

– Understand and apply the methods and procedures for the consolidation of financial statements;

– Understand the application of deferred taxes within the scope of the consolidation of accounts.

1. Financial Investments

1.1. Introduction

1.2. Accounting Classification of Financial Investments

1.3. Control, Significant Influence and Joint Control

1.4. Accounting Methods for Financial Investments

1.5. goodwill

1.6. NCRF 13 – Interests in Joint Ventures and Investments in Associates

1.7 Equity Method: accounting

2. Merger and Spin-off of Companies

2.1. Fusion

2.1.1 Introduction

2.1.2 Concept

2.1.3 Objectives/advantages

2.1.4 Disadvantages

2.1.5 Merger by incorporation: share exchange ratio

2.1.6 Steps of the merger process

2.2. spin-off

2.2.1 Concept and modalities

2.2.2 Conditions

2.2.3 Accounting

2.2.4 Phases of the spin-off operation

2.2.5 Spin-off: protection of partners, creditors and workers

3. Concentration of Business Activities

3.1. Introduction

3.2. NCRF 14 – Concentration of Business Activities

3.3. Purpose and scope

3.4. Accounting method – purchase method

3.4.1 Identify an acquirer

3.4.2 Determining the acquisition date

3.4.3 Measure the cost of CAE

3.4.4 Assign, on the acquisition date, the cost of CAE to the assets acquired and liabilities and contingent liabilities assumed

4. Consolidation of Financial Statements

4.1 Introduction to Account Consolidation:

4.2 Group concept

4.3 Concept of control

4.4 Notion of account consolidation

4.5 Consolidation perimeter

4.6 Mandatory preparation of consolidated accounts

4.7 Exemption from preparing consolidated accounts

4.8 Exclusion of consolidation

4.9. Operations prior to consolidation:

4.10 accounting homogenization

4.11 currency conversion: NCRF 23 – The effects of changes in exchange rates

4.12. Consolidation methods:

4.13 Integral method (NCRF 15)

4.14 Proportional method (NCRF 13)

4.15 Equity method (NCRF 13)

NAO

Books:

Gomes, João e Pires, Jorge (2010): SNC – Sistema de Normalização Contabilística – Teoria e Prática. Vida Económica, Porto.

Lopes, Carlos António Rosa (2010): Consolidação de Contas – de acordo com o SNC e Normas Internacionais de Contabilidade (IAS/IFRS). Edições Sílabo, Lisboa.

Rodrigues, Ana Maria (2007), Goodwill nas Contas Consolidadas, Coimbra Editora, Coimbra.

Rodrigues, João (2009): Sistema de Normalização Contabilística Explicado. Porto Editora, Porto.

Rodrigues, João (2015): Participações Financeiras e Consolidação de Contas. Porto Editora, Porto.

National Legislation and International Accounting Standards:

Decreto-lei nº 98/2015

NCRF 13 – Interesses em empreendimentos conjuntos e investimentos em associadas

NCRF 14 – Concentrações de Actividades Empresariais.

NCRF 15 – Investimentos em subsidiárias e consolidação

NCRF 23 – Os efeitos de alterações em taxas de câmbio.