TERMINOLOGY, FORMS & METHODS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS. COPYRIGHT RODERICK SEEMAN

SUBCHAPTER 4. CONSOLIDATION ADJUSTMENT ACCOUNT

Article 40. Indication of Consolidation Adjustment Account. In those situations where the differential arising out of the mutual elimination of the investment account of companies filing consolidated statements and the corresponding capital account of consolidated subsidiaries (hereinafter "the offset differential") cannot be transferred to another account based on cause analysis, notes must be enterd, corresponding to the divisions of the items below, in accord with the determinations of each of the items.

i. In those situations where it arises out of the fact that the amount of the investment account exceeds the amount of the capital account corresponding to it, the entry shall be made as a lump sum with an item named consolidation adjustment account at the end of the assets section of the consolidated balance sheet.

ii. In those situations where it arises out of the fact that the amount of the investment account is less than the amount of the capital account corresponding to it, the entry shall be made as a lump sum with an item named consolidation adjustment account at the end of the liabilities section.

2. Where, based on the offsetting eliminations in the investment accounts and capital accounts involving two or more consolidated subsidiaries, there arises the offset differential of item i of the previous Paragraph and the offset differential of item ii of the previous Paragraph, concerning the offset amount thereof, it is possible to make the same entries of the same Paragraph with an item named consolidation adjustment account.

3. In those situations where the amount of the consolidation adjustment account is small in amount, regardless of the provisions of Paragraph 1, it will not prevent the entry to be included in another suitable item. In this situation, a note must be made of the said item and the amount of the consolidation adjustment account.

4. The method of amortization of the consolidation adjustment account must be noted in the consolidated financial statements.