For example, students may have to adjust a draft consolidated statement of profit or loss, a draft consolidated statement of financial position or a draft consolidated statement of cash flows. Students will have to deal with issues such as accounting errors, changes in accounting policies, or the acquisition or disposal of a subsidiary.
Alternatively, there may be unrecorded transactions that require recognition or adjustment, such as a defined benefit plan or foreign exchange issues. In addition, students may have to discuss the impact on the financial statements of these adjustments. For example, has the parent company’s investment in a company now changed from a subsidiary relationship to that of an associate?
However, students will never be required to construct a consolidated financial statement (including a consolidated statement of cash flow) from the parent and subsidiaries’ separate financial statements.