ACCOUNTING FOR BUSINESS COMBINATIONS AND CONSOLIDATED FINANCIAL STATEMENTS - 1

The course contributes to the educational objectives of the Master's Degree Programme in Accounting and Finance, which aims to make students expert in addressing the accounting issues related to the representation and communication of business activities and their business combinations in compliance with national and international accounting standards. For this purpose, main goals of the course are:
- deepen the financial information of a group of entities;
- address the issues related to the definition of group and control, as well as the preparation of consolidated financial statements, in a national and international perspective;
- examine the national law (D. Lgs 127/91 e OIC 17) and international financial reporting standards (IFRS) with reference to the accounting representation and communication of the activities of business groups.
The second part of the course (Group accounting and enterprise extraordinary operations -2) presents the accounting issues arising from other business combinations that allow to carry out strategies of acquisition and reorganization of the business.

1 KNOWLEDGE AND UNDERSTANDING
As students of the Master's Degree Programme in Accounting and Finance have to acquire knowledge and understanding in business administration with particular reference to the accounting representation, the financial statements and the other tools to support decisions, through this course the students can complete their previous training in the area of financial statements of one single entity. Notably, at the end of this course it is expected that students know and are able to understand:
- the concept of group of entities;
- the alternative theories of consolidation that underpinning the national and international rules;
- the definition of consolidation area;
- the composition and format of consolidated financial statements;
- the accounting adjustments due for the preparation of consolidated financial statements.
2 APPLYING KNOWLEDGE AND UNDERSTANDING
Since students of the Master's Degree Programme in Accounting and Finance must be able to get expert in addressing issues related to accounting for business combinations, at the end of this course the student will be able to:
- carry out accounting adjustments in order to consolidate the interests in other entities and recognise consolidation differences;
- carry out accounting adjustments of intra-group transactions;
- prepare consolidated financial statements starting from financial statements of the parent company and subsidiaries.

To tackle the course, it is necessary to have already learnt the basic concepts and language of the economic analysis of business processes and the basic skills of accounting for business events and preparation of financial statements, which have been developed in the Business Administration course.
Moreover, the following topics are considered already known:
- the composition of financial statements and the structure of the balance sheet and income statement prepared in compliance with the Italian civil law and with IFRS, that have been developed in the Financial Statement Analysis course;
- measurement bases of the main assets and liabilities according to the Italian civil law, national accounting standards (OIC) and international financial reporting standards (IFRS), as well as the effects in terms of deferred tax, that have been analysed in the Financial Accounting course.

Group of entities and consolidated financial statements.
Alternative theories of consolidation and national and international requirements for the preparation of consolidated financial statements.
Definition of consolidation area in compliance with Italian civil law and IFRS.
Composition and contents of consolidated financial statements according to Italian civil law and IFRS.
Measurement of investments in other entities recognised in separate and consolidated financial statements complying with Italian civil law and IFRS.
Methods to estimate the value of companies under business combinations.
Preliminary phases of the consolidation process.
Consolidation adjustments:
- accounting treatment of interests in other entities and recognition of consolidation differences;
- accounting adjustments of intra-group transactions.
Proportional consolidation for investments in joint ventures.
Equity method.

U. Sostero, F. Cerbioni, C. Saccon, Bilancio consolidato: disciplina nazionale e IFRS, II ed., McGraw-Hill, 2018, excluding the following parts:
• Paragraphs from 4.4 to 4.7
• Examples 6.12; 6.13; 6.14
• Paragraphs 8.4.2; 8.4.3
• Chapter 10
• Paragraphs 11.5
• Chapter 12

Recommended supplementary readings:
Pisoni P., Busso D. Rizzato F., Il bilancio consolidato. Principi italian GAAP e casi operativi, III ed. Giuffrè, Milano, 2017.
Pisoni P., Biancone, P.P., Busso D., Cisi, M., Il bilancio consolidato. IFRS, II ed. Giuffrè, Milano, 2015.
Prencipe A., Tettamanzi P., Mancini C., Bilancio consolidato, V ed., Egea, Milano, 2021.
Teodori C., Il bilancio consolidato. Caratteristiche, costruzione e interpretazione, III ed., Giuffrè Francis Lefebvre, Milano, 2020.

The exam is unique for both parts of the course (Group accounting and enterprise extraordinary operations – 1 and Group accounting and enterprise extraordinary operations – 2) and is written only.
Generally, the exam consists of one open-ended theoretical question and one exercise for each part of the course and it has an overall duration of 2 hours.
To pass the exam students need to get sufficient in both parts. Otherwise, it is necessary to take the entire exam again.

The course includes lectures during which the theoretical aspects are presented and examples of the consolidation adjustments are carried out.

REGISTRATION FOR EXAM. Online registration is COMPULSORY. In case of registration problems, students are required to contact the economic campus a reasonable number of days BEFORE deadline.

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