Student guide Faculty of Economics A.Y. 2010/11

Consolidated Financial Statements
Aim of the course
The course provides an in-depth study of a topic area which the current process of business combinations has made increasingly relevant: consolidated financial reporting.
After reviewing the definition of company group and outlining the frameworks for control, students will analyse the problems associated with  drawing up consolidated statements for both the first consolidation period and for the subsequent periods. The final part of the course will illustrate the tax implications of consolidation and the analysis of the consolidated statements.
The study method employed seeks to foster logical understanding through extensive use of practical applications, and so attendance at lectures is strongly encouraged.
Part one : Tie-in with the topics covered in the basic course.
1.1 Control frameworks within company groups.
1.2 Area, theories and methods of consolidation.
1.3 Full consolidation according to the parent company theory.
Part two: Advanced consolidation topics.
2.1 Valuation of stakes in unconsolidated controlled subsidiaries and in associated companies.
2.2 Translation of financial statements drawn up in foreign currency.
2.3 Consolidated financial statements for periods subsequent to the first.
2.4 Consolidation by the proportional method.
2.5 Acquisition of companies in successive periods.
2.6 Purchase of stakes subsequent to gaining control.
2.7 Effects on the consolidated statements of sale, merger and demerger operations.
2.8 Relationship between the statements of the parent company and the consolidated statements.
2.9 The consolidated statements according to international accounting principles.
Part three: Consolidated statements and the taxation system.
3.1 Taxation within company groups.
3.2 Group VAT.
3.3 Income taxes: current, deferred and anticipated.
3.4 The "national consolidation" taxation regime.  
Part four: Method of analysis of the consolidated statements.
4.1 Reclassification of the consolidated Balance Sheet and Income Statement.
4.2 Analysis by indicators. Group financial leverage and the effects of share leverage.
4.3 Analysis by flows. The consolidated Cash Flow statement.
There will be a written examination at the end of the course.
Reading list
Slides and case studies supplied by the lecturers.
Tettamanzi P., Il bilancio consolidato, Guerini Studio, Milano, 2003