Equity Method of Consolidation is used when the parent company owns between 20% and 50% of the outstanding shares of the entity (i.e. Associate). It is an accounting technique to CONSOLIDATE financial statements of companies where one company has significant influence over another company. The method allows the Parent company … Read More

The concept Associate Vs Subsidiary EXPLAINS the ‘Associate’ in which another Co. has a SIGNIFICANT ownership stake, and ‘Subsidiary’ that is owned and CONTROLLED by another Co. What is an Associate? An ‘Associate’ a Co. in which another Co. has a SIGNIFICANT ownership stake, but NOT a controlling stake. The … Read More

The concept Consolidated Vs Unconsolidated Financial Statements DEPICTS that Consolidated FS reflect the Financial Statements of ‘Parent Company’ and its ‘Subsidiary/(ies)’ as a SINGLE Economic Entity and Unconsolidated FS reflect the Financial Statements of a ‘SINGLE Entity’. Consolidated Financial Statements Consolidated Financial Statements reflect the Financial Position, Performance, and Cash … Read More

The concept Accounting Entries for Acquisition of Subsidiary reflects that when a company ACQUIRES a subsidiary, it needs to account for the transaction properly in its financial statements. Proper accounting treatment for the acquisition of a subsidiary is essential as it provides stakeholders with a clear understanding of the financial … Read More

The concept IFRS 9 Vs IAS 39 STATES that the key difference is in relation to the approach to ‘IMPAIRMENT’. IFRS 9 uses ‘Expected Credit Losses‘ (ECLs) to recognize impairment losses on financial assets, while IAS 39 ‘Incurred Losses‘. What is IFRS 9? IFRS 9 the International Financial Reporting Standard … Read More

IAS 17 Vs IFRS 16 a concept that relates to LEASING. ´IAS 17´ is the International Accounting Standard (IAS) for leases that was issued by the International Accounting Standards Board (IASB) in 1982, while IFRS 16 is the new leasing standard that was issued by the IASB in 2016. IAS … Read More

The concept Difference between Provision and Contingent Liability DESCRIBES that ‘Provision‘ is a liability that is recognized in the financial statements when a company has a probable obligation or a present obligation and ‘Contingent Liability‘ is a potential liability that may arise from past events but is uncertain in terms … Read More

The concept Strike Price Vs Exercise Price STATES that ‘Strike Price‘ is the price at which the underlying asset can be bought or sold, and ‘Exercise Price‘ the price at which the underlying asset can be bought or sold when the option is exercised. What is Strike Price? The ‘Strike Price’ … Read More

The concept Strike Price Vs Spot Price STATES that ‘Strike Price‘ is the price at which the underlying asset can be bought or sold, and ‘Spot Price‘ is the current Market Price of an underlying asset. Both terms are frequently used in options and futures trading, and they play a … Read More

Call Option is a Financial Instrument that gives the holder the right, but not the obligation, to purchase an underlying asset at a predetermined price, known as the strike price, within a SPECIFIC period of time, known as the ‘expiration date’. They are commonly USED in the stock market as … Read More