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Section 15 – Example 1 – Extract from the accounting policy notes to the consolidated financial statements
Example 23: Extract from the accounting policy notes to the consolidated financial statements
Basis of consolidation The Group financial statements reflect the consolidation of the results, assets and liabilities of the parent undertaking, the Company and all of its subsidiaries, together with the Group’s share of profits/losses of associates and joint ventures. Where a subsidiary, associate or joint venture is acquired or disposed of during the financial year, the Group financial statements include the attributable results from, or to, the effective date when control passes, or, in the case of associates, when significant influence is lost. Subsidiary undertakings Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition related costs are capitalised with the cost of the investment. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income. Associates and joint ventures Associates are those entities in which the Group has significant influence over, but not control of, the financial and operating policies. Joint ventures are those entities over which the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic, financial and operating decisions. Investments in associates and joint ventures are accounted for using the equity method of accounting. Under the equity method of accounting, the Group’s share of the post-acquisition profits or losses of its associates and joint ventures is recognised in the income statement. The income statement reflects, in profit before tax, the Group’s share of profit after tax of its associates and joint ventures in accordance with Section 14, ‘Investments in Associates’ and Section 15, ‘Interests in Joint Ventures’. The Group’s interest in their net assets is included as investments in associates and joint ventures in the Group Statement of Financial Position at an amount representing the Group’s share of the fair value of the identifiable net assets at acquisition plus the Group’s share of post-acquisition retained income and expenses. The Group’s investment in associates and joint ventures includes goodwill on acquisition. The amounts included in the financial statements in respect of the post-acquisition income and expenses of associates and joint ventures are taken from their latest financial statements prepared up to their respective year ends together with management accounts for the intervening periods to the Group’s year end. The fair value of any investment retained in a former subsidiary is regarded as a cost on initial recognition of an investment in an associate or joint venture. Where necessary, the accounting policies of associates and joint ventures have been changed to ensure consistency with the policies adopted by the Group. Transactions eliminated on consolidation Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the Group financial statements. Unrealised gains and income and expenses arising from transactions with associates and joint ventures are eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that they do not provide evidence of impairment.
Example 23: Extract from notes to the financial statements – Joint Venture undertakings note in the consolidated financial statements
| 16 Financial assets Investments in joint venture | 2015 € | 2014 € |
| At 1 January | XXXX | XXXX |
| Share of profits after tax | XXX | XXX |
| Dividends received | (XXX) | (XXX) |
| Loss on dilution of investment | (XX) | (XX) |
| Arising on acquisition | XX | XX |
| Share of other comprehensive (expense)/income | (XXX) | (XXX) |
| At 31 December | XXXX | XXXX |
- Details of investments in which the parent Company holds 20% or more of the nominal value of any class of share capital are as follows:
| Name and Registered Office | Nature of Business | Nature of Shares Held | % of Share Class Held |
| Subsidiary undertakings | |||
| (i) XXXX Limited Address 1, Address 2, Ireland | Machinery Manufacturing | Ordinary share capital | 100% |
| This investment has been fully provided against. | |||
| (ii) XXXX Limited Address 1, Address 2, Ireland | Patent holding company | Ordinary share capital | 100% |
| Associate | |||
| (iii) XXXX Limited Address 1, Address 2, Ireland | Machinery Manufacturing | Ordinary share capital | 25% |
| Joint Venture | |||
| (iv) XXXX Limited Address 1, Address 2, Ireland | Machinery Manufacturing | Ordinary share capital | 50% |
Extract from the consolidated profit and loss account showing share of joint venture interest
| 2015 | 2014 | |
| € | € | |
| Turnover | XXXXX | XXXXX |
| Cost of sales | (XXXX) | (XXXX) |
| Gross profit | XXXX | XXXX |
| Operating expenses | (XXX) | (XXX) |
| Other operating income | XXX | XXX |
| Group operating profit | XXX | XXX |
| Share of profit in joint venture | XXX | XXX |
| Profit on ordinary activities before interest and taxation | XXXX | XXXX |
| Interest receivable | XXX | XXX |
| Interest payable | (XXX) | (XXX) |
| Profit on ordinary activities before taxation | XXXX | XXXX |
| Tax on profit on ordinary activities | (XXX) | (XXX) |
| Profit on ordinary activities after taxation | XXX | XXX |
Extract 24: Extract from accounting policy notes to the financial statements for the parent entity financial statements and for an entity that holds a joint venture interest but is not required to prepare consolidated financial statements
THE BELOW IS TO BE INCLUDED WHERE THE PARENT COMPANY IS EXEMPT FROM CONSOLIDATION DUE TO ITS IMMEDIATE PARENT COMPANY (WHICH IS IN THE EEA) PREPARING CONSOLIDATED FINANCIAL STATEMENTS Consolidated accounts The company has not prepared consolidated accounts for the period as, being a wholly owned subsidiary of the ultimate parent company, XXXXXX Limited, it is exempted from doing so under Section 9 of FRS 102 which is accommodated under Section 299 of the Companies Act 2014 and its reference to the EU 7th Directive equivalence. THE BELOW IS TO BE INCLUDED WHERE THE PARENT COMPANY IS EXEMPT FROM CONSOLIDATION DUE TO ITS ULTIMATE PARENT COMPANY (WHICH IS IN OR OUTSIDE THE EEA) PREPARING CONSOLIDATED FINANCIAL STATEMENTS Consolidated accounts The company has not prepared consolidated accounts for the period as, being a wholly owned subsidiary of the ultimate parent company, XXXXXX Limited, it is exempted from doing so under Section 9 of FRS 102 which is accommodated under Section 300 of the Companies Act 2014 and its reference to the EU 7th Directive equivalence. THE BELOW IS TO BE INCLUDED WHERE THE PARENT COMPANY IS EXEMPT FROM CONSOLIDATION DUE TO THE GROUP BEIING CONSIDERED A SMALL COMPANY UNDER COMPANY LAW Consolidation The company and its subsidiaries combined meet the size exemption criteria for a group and the company is therefore exempt from the requirement to prepare consolidated financial statements by virtue of Section 297 of the Companies Act 2014. Consequently, these financial statements deal with the results of the company as a single entity. Financial assets Financial assets are stated at cost less provision for any diminution in value. Financial assets which can be reliably measured are measured at their fair value. Dividends Dividends from the company’s shares are recognised as income on receipt of the dividend. Extract from notes to the financial statements for the parent entity financial statements – Financial asset note
| 9 Financial assets | Subsidiary Undertakings | Joint Venture and associates | Other investments | Total | |
| € | € | € | € | ||
| Cost | |||||
| At 1 January 2015 & 1 January 2014 & 1 January 2013 | XXX | XXX | XXX | XXX | |
| Additions | XXX | XXX | XXX | XXX | |
| Fair value adjustments | – | XXX | – | XXX | |
| Disposals | (XXX) | – | – | (XXX) | |
| At 31 December 2015 | XXX | XXX | XXX | XXX | |
| Amounts provided: | |||||
| At 1 January 2015, 1 January 2014 & 1 January 2013 | XXX | XXX | XXX | XXX | |
| Additional provision | XXX | – | – | XX | |
| At 31 December 2015 | XXX | XXX | XXX | XXX | |
| Carrying amount | |||||
| At 31 December 2015 | XXXX | XXXX | XXXX | XXXX | |
| At 31 December 2014 | XXXX | XXXX | XXXX | XXXX |
(a) Investment in Subsidiary undertakings are stated at cost less impairment. Investments in associates are measured at fair value based on the quoted share prices. Other investments are held at cost less impairment. The fair value of the joint venture interest cannot be determined as there is no published price quotations.
(b) Details of investments in which the parent Company holds 20% or more of the nominal value of any class of share capital are as follows:
| Name and Registered Office | Nature of Business | Nature of Shares Held | % of Share Class Held |
| Subsidiary undertakings | |||
| (v) XXXX Limited Address 1, Address 2, Ireland | Machinery Manufacturing | Ordinary share capital | 100% |
| This investment has been fully provided against. | |||
| (vi) XXXX Limited Address 1, Address 2, Ireland | Patent holding company | Ordinary share capital | 100% |
| Associate | |||
| (vii) XXXX Limited Address 1, Address 2, Ireland | Machinery Manufacturing | Ordinary share capital | 25% |
| Joint Venture | |||
| (viii) XXXX Limited Address 1, Address 2, Ireland | Machinery Manufacturing | Ordinary share capital | 50% |
Example 25: Extract from notes to the financial statements for the for an entity that holds an associate/subsidiary/joint venture interest but is not required to prepare consolidated financial statements – Financial asset note
| 9 Financial assets | Subsidiary Undertakings | Joint Venture and Associates | Other investments | Total | |
| € | € | € | € | ||
| Cost | |||||
| At 1 January 2015, 1 January 2014 & 1 January 2013 | XXX | XXX | XXX | XXX | |
| Additions | XXX | XXX | XXX | XXX | |
| Fair value adjustments | – | XXX | XXX | ||
| Disposals | (XXX) | – | – | (XXX) | |
| At 31 December 2015 | XXX | XXX | XXX | XXX | |
| Amounts provided: | |||||
| At 1 January 2015, 1 January 2014 & 1 January 2013 | XXX | XXX | XXX | XXX | |
| Additional provision | XXX | – | – | XX | |
| At 31 December 2015 | XXX | XXX | XXX | XXX | |
| Carrying amount | |||||
| At 31 December 2015 | XXXX | XXXX | XXXX | XXXX | |
| At 31 December 2014 | XXXX | XXXX | XXXX | XXXX |
(a) Investment in Subsidiary undertakings are stated at cost less impairment. Other investments are held at cost less impairment.
Investments in joint ventures are measured at fair value based on valuation models which make the most of external market data such that the fair value represents the estimated value that could be obtained in an arm’s length transaction under normal business conditions. The discounted cash flows use a discount rate of 10%. The valuation used a multiple of earnings which is consistent with industry norms
(b) Details of investments in which the parent Company holds 20% or more of the nominal value of any class of share capital are as follows:
| Name and Registered Office | Nature of Business | Nature of Shares Held | %of Share Class Held | Net Assets/ Liabilities | Results for year |
| € | € | ||||
| Subsidiary undertakings | |||||
| (ix) XXXX Limited Address 1, Address 2, Ireland | Machinery Manufacturing | Ordinary share capital | 100% | XXXX | XXXX |
| This investment has been fully provided against. | |||||
| (x) XXXX Limited Address 1, Address 2, Ireland | Patent holding company | Ordinary share capital | 100% | XXX | XXXX |
| Associate | |||||
| (xi) XXXX Limited Address 1, Address 2, Ireland | Machinery Manufacturing | Ordinary share capital | 25% | XXXX | XXXX |
| Joint Venture | |||||
| (xii) XXXX Limited Address 1, Address 2, Ireland | Machinery Manufacturing | Ordinary share capital | 50% | XXXX | XXXX |
Example 26: Extract from the profit and loss account for an entity which is not a parent that holds an investment in an associate/joint venture or an entity that is a parent but consolidated financial statements are not required to be prepared where income is received from an associate/joint venture/subsidiary
| 2015 | 2014 | |
| € | € | |
| Turnover | – | – |
| Cost of sales | (XXX) | (XXX) |
| Gross profit | – | – |
| Administrative expenses | (XXX) | – |
| Operating loss | (XXX) | – |
| Income from shares in joint venture | XXXX | – |
| Income from other financial assets | XXXX | – |
| Interest payable | (XX) | (XXX) |
| Profit/(loss) on ordinary activities before taxation | 86,442 | (22) |
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