CC BY
0IMPROVING THE PREPARATION OF CONSOLIDATED FINANCIAL
STATEMENTS OF FIXED ASSETS IN THE DIGITAL ECONOMY
Mamarasulov Diyorbek Alijon ugli
Doctoral student of Fergana Polytechnic Institute, Uzbekistan
diyorbek@poscointltex. com
Abstract: This research article explores the implications of consolidating fixed assets in Uzbekistan's evolving economic landscape, with a focus on enhancing transparency and accountability. By leveraging digital technologies and adopting international best practices, organizations can improve the accuracy, reliability, and accessibility of fixed asset information. This study investigates the current status of fixed asset consolidation practices in Uzbekistan, identifies key challenges faced by organizations, and proposes strategies to enhance transparency and accountability. Furthermore, it explores the regulatory framework and accounting standards relevant to fixed asset consolidation in Uzbekistan, highlighting the need for alignment with international financial reporting requirements. The majority of the paper is about a method of consolidation for subsidiary companies using the acquisition method. In article business combinations were defined in accordance with IFRS 3, IFRS 10 and IAS 28 and the basic requirements for carrying out the acquisition method were also examined. New accounting charter has been offered for non-controlling interest account in charter of accounts by number of8540. Ultimately, this article contributes to the ongoing discourse on enhancing financial transparency and accountability in Uzbekistan's digital economy through the consolidation of fixed assets.
Keywords: financial statements, consolidation, fixed asset, fixed asset consolidation, subsidiary, associate, IFRS, non-controlling interest, chart of accounts.
RAQAMLI IQTISODIYOTDA ASOSIY VOSITALARNING KONSOLIDATSIYALANGAN MOLIYAVIY HISOBOTLARINI TUZISHNI
TAKOMILLASHTIRISH
Mamarasulov Diyorbek Alijon o'g'li
Farg'ona politexnika instituti tayanch doktoranti diyorbek@poscointltex. com
Annotatsiya: Ushbu maqolada O'zbekistonning rivojlanayotgan iqtisodiy muhitida asosiy vositalarni konsolidatsiyalashning ahamiyati oshkoralik va
hisobdorlikni oshirishga qaratilgan. Raqamli texnologiyalardan foydalanish va ilg'or xalqaro tajribalarni qo'llash orqali tashkilotlar asosiy vositalar ma'lumotlarining aniqligi, ishonchliligi va ulardan foydalanish imkoniyatini oshirishi mumkin. Ushbu tadqiqot O'zbekistonda asosiy vositalarni konsolidatsiyalash amaliyotining hozirgi holatini o'rganadi, tashkilotlar duch keladigan asosiy muammolarni aniqlaydi hamda shaffoflik va hisobdorlikni oshirish bo'yicha strategiyalarni taklif qiladi. Bundan tashqari, u O'zbekistonda asosiy vositalarni konsolidatsiyalash bilan bog'liq me'yoriy-huquqiy asos va buxgalteriya hisobi standartlarini o'rganib, xalqaro moliyaviy hisobot talablariga muvofiqlashtirish zarurligini ta'kidlaydi. Maqolada sho'ba korxonalarga kiritilgan investitsiyalarni sotib olish usulidan foydalangan holda konsolidatsiyalash ochib berilgan. Maqolada biznes birlashuvlari 3-MHXS, 10-MHXS va 28-XBS ga muvofiq o'rganilgan hamda sotib olish usulini amalga oshirish uchun asosiy talablar ham ko'rib chiqilgan. Buxgalteriya schetlar rej asida nazorat qilinmaydigan ulushlar hisobi bo'yicha yangi buxgalteriya scheti 8540 ni ochish taklif qilingan. Natijada ushbu maqola O'zbekiston raqamli iqtisodiyotida asosiy vositalar bo'yicha konsolidatsiyalashgan hisobot tuzish orqali moliyaviy shaffoflik va hisobdorlikni oshirish bo'yicha davom etayotgan muhokamaga hissa qo'shadi.
Kalit so'zlar: moliyaviy hisobotlar, konsolidatsiya, asosiy vositalar, asosiy vositalarni birlashtirish, sho 'ba, assotsatsiya, MHXS, nazorat qilinmaydigan ulush, schetlar rejasi.
СОВЕРШЕНСТВОВАНИЕ ПОДГОТОВКИ КОНСОЛИДИРОВАННОЙ ФИНАНСОВОЙ ОТЧЕТНОСТИ ОСНОВНЫХ СРЕДСТВ В УСЛОВИЯХ
ЦИФРОВОЙ ЭКОНОМИКИ
Мамарасулов Диёрбек Алижон угли
Докторант Ферганского политехнического института diyorbek@poscointltex.com
Аннотация: В данной исследовательской статье исследуются последствия консолидации основных средств в развивающейся экономической ситуации Узбекистана с упором на повышение прозрачности и подотчетности. Используя цифровые технологии и принимая передовой международный опыт, организации могут повысить точность, надежность и доступность информации об основных средствах. В этом исследовании изучается текущее состояние практики консолидации основных средств в Узбекистане, определяются ключевые проблемы, с которыми сталкиваются организации, и предлагаются стратегии по повышению прозрачности и подотчетности. Кроме того, в нем
исследуются нормативная база и стандарты бухгалтерского учета, имеющие отношение к консолидации основных средств в Узбекистане, подчеркивая необходимость их приведения в соответствие с международными требованиями финансовой отчетности. Большая часть статьи посвящена методу консолидации дочерних компаний методом приобретения. В статье были определены объединения бизнеса в соответствии с МСФО 3, МСФО 10 и МСФО 28, а также рассмотрены основные требования к применению метода приобретения. Для учета неконтролирующих долей участия в плане счетов предлагается открыть новый учетный план 8540. В конечном итоге, данная статья вносит свой вклад в продолжающийся дискурс по повышению финансовой прозрачности и подотчетности в цифровой экономике Узбекистана посредством консолидации основных средств.
Ключевые слова: финансовая отчетность, консолидация, основные средства, консолидация основных средств, дочерняя компания, ассоциированная компания, МСФО, неконтролирующая доля участия, план счетов.
INTRODUCTION
In the realm of financial reporting, the accurate representation of fixed assets holds significant importance for stakeholders, as it reflects the tangible investments and long-term resources of an organization. In Uzbekistan, as the economy undergoes rapid transformation and globalization, the need for transparent and accountable reporting of fixed assets becomes increasingly vital [6]. However, achieving this goal necessitates effective consolidation practices that align with international standards while considering the unique characteristics of the Uzbekistan business landscape.
Fixed assets, such as property, plant, and equipment, form a substantial portion of an organization's assets and have a significant impact on its financial position. Consolidating fixed assets reporting involves combining the financial information of multiple entities or subsidiaries within an organization to present a holistic and accurate view of its fixed asset base. This consolidation provides stakeholders with a comprehensive understanding of the organization's asset value, depreciation, and overall financial health.
The current state of fixed assets reporting in Uzbekistan faces several challenges. The existing reporting standards and frameworks may lack clarity and consistency [14], leading to variations in asset valuation methods and disclosure practices. These inconsistencies limit comparability between organizations and hinder stakeholders' ability to make informed decisions based on financial statements. Furthermore, inadequate transparency and accountability in fixed assets reporting can undermine investor confidence and impede the country's economic growth.
The adoption of consolidated fixed assets reporting practices has been widely recognized as a means of addressing these challenges and improving financial reporting quality. By consolidating the fixed assets information from various entities within an organization, transparency and accountability can be enhanced, and stakeholders can gain a more accurate and complete understanding of an organization's financial position. Consolidated reporting also facilitates better decision-making, risk assessment, and resource allocation for both internal and external stakeholders.
This research aims to explore the concept of consolidating fixed assets reporting in Uzbekistan and its potential to enhance transparency and accountability in financial reporting practices. By analyzing the current state of fixed assets reporting in Uzbekistan and studying international best practices, this research seeks to identify the gaps, challenges, and opportunities for improvement in the country's financial reporting system.
Through a comparative analysis of organizations that have adopted consolidated fixed assets reporting and those that have not, this research will evaluate the impact of consolidation on transparency, accuracy, and reliability of fixed assets information. It will also identify the potential barriers and challenges to implementing consolidated reporting in Uzbekistan, including resource availability, technological infrastructure, capacity building needs, and legal and regulatory frameworks.
Based on the findings, this research will provide recommendations and guidelines for policymakers, regulators, and organizations in Uzbekistan to enhance transparency and accountability in fixed assets reporting [9]. These recommendations will focus on improving reporting standards, disclosure requirements, valuation methods, and implementation strategies, with the ultimate goal of promoting consistency, comparability, and reliability in financial reporting practices.
By undertaking this research, we aim to contribute to the existing body of knowledge on financial reporting practices, specifically in the area of fixed assets reporting in Uzbekistan. The outcomes of this study will provide valuable insights and practical recommendations for stakeholders, enabling them to make informed decisions, enhance accountability, and foster a robust financial reporting environment in Uzbekistan.
LITERATURE REVIEW
Various researchers and scholars have conducted research on the consolidation of fixed assets, each contributing valuable insights to the field of accounting, finance, and auditing. Some notable researchers who have explored topics related to the consolidation of fixed assets include: Prof. Mary E. Barth: Professor Barth has extensively researched topics related to financial reporting and international accounting standards, including fixed assets accounting and consolidation, Prof.
Wayne R. Landsman: Prof. Landsman's research focuses on financial accounting and reporting issues, including topics related to fixed assets valuation, impairment, and consolidation, Prof. Robert S. Kaplan: Prof. Kaplan is known for his research on performance measurement and management accounting. His work often touches on topics related to fixed assets management and reporting, Prof. Stephen A. Zeff: Prof. Zeff has researched extensively on international accounting standards and their implementation, which may include studies on fixed assets consolidation under different accounting frameworks.
Viktor S.Plotnikov and other colleagues attempted to clarify qualitative characteristics of consolidated financial statements and specific methods and techniques of the system of consolidated accounts, which are applied for preparation of consolidated financial statements, based on consideration of the IASB's Conceptual Framework for Preparation and Presentation of Financial Statements.[15]
Article by Kotova K.Yu., and Snigireva O.Yu. outlines and improves the key points that enable us to assess the effectiveness of the consolidated group's work by means of reporting analysis based on methods that take into account the specific features of the individual enterprises entering the study group. In some researches on preparation of consolidation reports, consolidation and summary report and their differences are discussed and the reporting methodologies have been studied. [16]
According to Plotnikov V.S the primary purpose is to present the financial performance and financial position of the reporting entity (the parent company) as if it were a single entity. Consequently, for accounting purposes, the legal boundaries of the group's enterprises are conditionally erased when preparing consolidated financial statements. The internationalization of capital and its concentration leads to the further development of collective forms of private property [14].
Mainly foreign economists carried out scientific research on the preparation and improvement of consolidated financial statements. Among them are E. A. Arens, D. K. Lobbek, P. S. Bezrukikh, V. V. Kovalev, B. Needles, H. Anderson, D. Caldwell, V. F. Pali, R. Anthony, Dj. Rees, A. D. Sheremet, V. P. Suits, Ya. V. Sokolov can be included.
The textbooks, monographs and training manuals created by the economists of our republic, as well as published scientific articles and theses, only studied the theoretical aspects of the preparation of consolidated financial statements. For example, R.D. Dosmuratov, A.K. Ibragimov, A.A. Karimov, Z.T. Mamatov, A.Kh. Pardaev, M.Q. Pardaev, B.A. Khasanov, K.B. Orazov, N.F. Karimov, B.K. Hamdamov, I.N. Ismanov [13], B.Yu. Maksudov, H.N. Musaev, A.J. Tuychiev, I.N. Koziev, Z.N. Kurbanov, K. In the works of R. Khotamov, A.Z. Avlokulov, S.N. Tashnazarov, the problems of developing the theoretical aspects of financial reporting are studied.
S.Nasretdinov and N.Khozhabekov, scientists who contributed to the improvement of the procedure for drawing up consolidated financial reports in our republic, laid the groundwork for the scientific foundation of the consolidated financial report in their dissertations and scientific articles.
It should be noted that the issues of improving the methodology of fixed assets in consolidated financial statements have not been sufficiently studied by our economists as a special, scientific research object.
METHODOLOGY
Having analyzed the concept of consolidated financial statements, we conclude that the scope of this research should determine the contents of consolidated financial reporting and regard a consolidated group as an economic combination of legally independent entities, which are recognized as a single business mechanism. This approach produces the definition of consolidated financial reporting as a set of indicators reflecting the financial position of entities, which are captured within the same consolidated perimeter as a single entity, but with separate recognition of titles of the parent company's shareholders and non-controlling interests.
DISCUSSION AND RESULTS
The consolidation problem is one of the most difficult areas of theory, analysis, and reporting policy. Although the first consolidated reports appeared more than a century ago, they were long overdue as a response to a need for information on a group's financial, income, and proprietary position, as well as their legal and professional regulatory rules. Legislators have permitted a lack of regulatory standards in the consolidation industry because they do not want to enforce tight and inflexible norms, and accounting professionals have a dominating opinion that legal independence of group members is more important than economic unity of the group. The United States and the United Kingdom were the first countries to legalize consolidation, followed by countries in Continental Europe.
In economies where there are groups of firms, it is now common practice to perform consolidated financial reporting. In the previous few decades, preparing consolidated financial accounts has grown increasingly important. With the growing association of businesses into groups, and subsequently a more thorough connection of small and medium businesses beyond national borders, there is a greater need for national legislatures to unite in the consolidation field.
As a result, the International Accounting Standards Board addresses the problem of consolidation in all five international accounting standards. After this, there has been a substantial contribution to the harmonization of European rules and the approach to the Anglo-American consolidation practice.
Accordingly, nowadays Resolution of the President of the Republic of Uzbekistan "On additional measures for the transition to international financial reporting standards" was published in the official press in February 2020 [2]. From January 1, 2021, legal entities included in the category of medium-sized organizations and large taxpayers will organize accounting on the basis of International Financial Reporting Standards (IFRS) and from the end of2021, will prepare financial statements on the basis of IFRS to provide foreign investors with the necessary information environment and expand access to international financial markets. It means that In Uzbekistan also accepting consolidation procedures in economic financial reporting processes [11].
We can examine the group of firms in a narrower and broader sense using the IAS 27 Consolidated and Separated Financial Statements. The parent firm and subsidiary companies that belong to the group are referred to as the group in its broadest sense. The subsidiary companies are those that have a dominant influence, i.e. the parent company has a controlling effect over the subsidiary company's business and financial policy. A control is the ability to manage an entity's financial and business policies in order to profit from its operations. In a larger sense, the group includes, in addition to the parent and subsidiary companies, joint (joint ventures) and linked enterprises (associates). The associates are individuals who are influenced over but parent don't have any control over it. Significant influence entails the ability to participate in decision-making in an entity's financial and business policies, but not control over such policies. The parent business receives 20-50 percent voting rights as a result of this influence. Joint enterprises are businesses that are managed in tandem with other businesses in the group, as well as businesses that are not part of the group. As a result, the strongest link exists between the parent firm and subsidiary companies, followed by the parent company and associates, and finally the joint ventures. The International Accounting Standards have been applied logically to this falling series in terms of correlation degree [12]. The parent company and subsidiary firms are covered by IAS 27, associates are covered by IAS 28, and joint ventures are covered by IAS 31. The first example below demonstrates how to develop relationships within a group of businesses.
Example no. 1 - The firm A holds 80% of the capital stock of the company B, which includes voting rights at the General Shareholders Assembly. The firm B holds 25% of the capital stock of the company C, which includes voting rights at the General Shareholders Assembly, and 30% of the company C's preference shares. The firm B also has the option to purchase the shares of the company D, which it can do at any time after receiving a bonus at a market price at the time they were issued, and if it does, it will get 10% ownership and voting rights in the company D. The company A
owns 5% of capital stocks with the voting rights and 55% of the preference shares of the company D. Make determination of the relations character between the companies!
Solution - The company A is the parent company, the company B is dependent on the company A, because it owns 80% of capital stocks in the company B. The company C is the associated company in regard to the company A, while the company A has indirectly, over its subsidiary company B, 25% of the capital stocks of the company C (does not take into consideration the preference shares while they provide no voting rights). The company D is correlated with the company A after investment in the securities, because the company A has only 5% of the capital stocks in the company D. The company D is also correlated to the company B after the investments in the securities, while options on shares which provide 10% of share in the company D, can use at any time. Further issue of the paper is directed to the complete consolidation, for which is relevant the group of enterprises in the narrow sense.
The capital investment of one company in another (the parent company in a subsidiary company and among subsidiary companies) is initially recorded in the individual balance sheets of the companies involved in the transaction. The company that invests in the capital of the other company registers the transaction as an asset - a share in a joint venture. The transaction is recorded as an increase in liabilities by the company that was invested. In order to make informed decisions about their investment, shareholders would need to read and interpret the financial statements of both entities. If there were more than one subsidiary entity this could become quite complex for shareholders. To this end one set of financial statements is prepared where the revenues, expenses, assets and liabilities of the parent and subsidiary are combined for ease of understanding and analysis.
The key points relating to the preparation of a consolidated statement of financial position and consolidated statement of financial performance are as follows:
- The assets and liabilities of the parent and the subsidiary are added together on a line-by-line basis
- The investment in the subsidiary included in the parent's SoFP is replaced by a goodwill asset in the consolidated SoFP
- The equity (ordinary) share capital and share premium balances of the parent and subsidiary are not added together; only the parent entity balances for equity share capital and share premium are included in the consolidated SoFP. This reflects the fact that the consolidated SoFP includes all of the assets and liabilities under the control of the parent entity
- The amount attributable to non-controlling interests is calculated and shown separately on the face of the consolidated SoFP
- The group share of the subsidiary's post-acquisition retained earnings is calculated and included as part of group retained earnings
- Parent and Subsidiary may well trade with each leading to cancel each other out receivables and payables in P and S
- If a dividend is paid by one entity and received by the other, the net effect of this to the group is zero
- Add together the revenues and expenses of the parent and the subsidiary on a line-by-line basis and, if the subsidiary is acquired part-way through the year, time-apportion the results of the subsidiary
- Eliminate intra-group sales and purchases
- Eliminate unrealized profit held in closing inventory relating to intragroup trading
- Calculate the profits attributable to the non-controlling interests
According to the IFRS 3 Business Combinations, which was reviewed in 2008,
for the capital consolidation can apply the acquisition method [5]. This method requires:
a) identification of an acquirer,
b) determination of the acquisition date,
c) recognition and measurement of acquired recognizable property, overtaken liabilities and every share without control right in acquired entity, and
d) recognition and measurement of goodwill or profit from a bargain Example no. 2 - The assumption is that the parent company A has gained 100% of shares in the subsidiary company B. At that date individual balances of the mentioned enterprises look like:
Account A B
Property, plant & equipment 85 000 18 000
Shares in B 60 000
Current assets 160 000 84 000
Total assets 305 000 102 000
Equity shares @ $1 each 65 000 20 000
Share premium 35 000 10 000
Retained earnings 70 000 25 000
Current liabilities 135 000 47 000
Total equity and liability 305 000 102 000
Solution - for preparing consolidated statement of financial position the main points here are shares, net assets of B at acquisition, adding line by line. In the following table we can see consolidated figures:
Account Calculation A&B
Property, plant & equipment 85 000+18 000 103 000
Goodwill 60 000-(20 000+10 000+25 000) 5 000
Current assets 160 000+84 000 244 000
Total assets 352 000
Equity shares @ $1 each 65 000 65 000
Share premium 35 000 35 000
Retained earnings 70 000 70 000
Current liabilities 135 000+47 000 182 000
Total equity and liability 352 000
In the next example is described a situation when the parent company has share less than 100% in the subsidiary company's capital. In that case appears the position share which does not provide control, which expresses separately from the subsidiary company's equity capital. The share that does not provide control, i.e. the minority share is a part of profit or loss and the subsidiary company's net assets, which can ascribe to shares in capital, not owned by the parent company, neither directly, or indirectly, through the subsidiary companies.
Example no. 3 - A acquired an 80% holding in B on 1 January 20X8. At this date B's retained earnings stood at $20,000. On this date, the fair value of the 20% noncontrolling shareholding in J was $12,500.
Account A B
Property, plant & equipment 85 000 18 000
Shares in B 60 000
Current assets 160 000 84 000
Total assets 305 000 102 000
Equity shares @ $1 each 65 000 20 000
Share premium 35 000 10 000
Retained earnings 70 000 25 000
Current liabilities 135 000 47 000
Total equity and liability 305 000 102 000
Solution - for preparing consolidated statement of financial position the main points here are shares, net assets of B at acquisition and at reporting, and considering noncontrolling interest. In the following table we can see consolidated figures:
Account Calculation A&B
Property, plant & equipment 85 000+18 000 103 000
Goodwill 60 000+12 500-(20 000+10 000+20 000) 22 500
Current assets 160 000+84 000 244 000
Total assets 369 500
Equity shares @ $1 each 65 000 65 000
Share premium 35 000 35 000
Retained earnings 70 000+(25 000-20 000)*80% 74 000
Non-controlling interest 12 500+(25 000-20 000)*20% 13 500
Current liabilities 135 000+47 000 182 000
Total equity and liability 369 500
Every subsequent consolidation proceeds in the same manner, unless the parent firm decides not to sell its share in one or more of the subsidiary companies. This is the point at which the consolidation will come to an end. The sale of the parent company's share in the capital of the subsidiary firm is recorded in the parent company's segregated balance in such a way that the share becomes cash. The realized profit or loss on a sale is the difference between the sales price and the book price. Following the sale of a share, the parent company will remove all assets and liabilities related to the sold subsidiary company when calculating the consolidated balance.
Fair value adjustments could include adjustments to recognized assets, such as property. There may also be intangible assets that are not recognized in the subsidiary's financial statements due to being internally generated. These will be recognized within the consolidated financial statements, as the parent is now purchasing these assets as part of buying the subsidiary, and a reliable measure of cost is therefore available.
If there is a post-acquisition revaluation in the subsidiary's non-current assets, the full amount of the gain should be added to non-current assets. The parent's share of the gain is taken to the revaluation surplus, with the non-controlling interest share of the gain being taken to NCI.
For example, Parent company has owned 80% of Subsidiary company for many years. During the current year, P and S both revalue their properties for the first time. Both properties increase by $100,000. The revaluations will be shown as follows: Dr 0100 $200,000
Cr 8510 ($100,000 + (80% x $100,000)) $180,000 Cr 8540 (20% x $100,000) $20,000
Here we are using 8540 new account for non-controlling interest, as there are no any related account in the chart of accounts according to national accounting standard
[3].
Profits made by entities within a group on transactions with other group entities
are:
- recognized in the accounts of the individual entities concerned, but
- in terms of the group as a whole, such profits are unrealized and must be eliminated from the consolidated financial statements.
Unrealized profit may arise within a group on:
- inventory where entities trade with one another
- non-current assets where one group entity has transferred an asset to another. The key is that we need to remove this profit by creating a Provision for
Unrealized Profit (PUP). Any profit on sale that is made by the selling entity is unrealized and eliminated as with inventory. Unlike inventory, which is usually sold shortly after the reporting date, goods that become non-current assets of the receiving entity are likely to be included in the consolidated statement of financial position for a number of years. Where there is unrealized profit on non-current assets the necessary reduction in non-current assets will reduce as the non-current asset is depreciated. Therefore, the PUP must be recalculated at the end of each period in which the asset appears in the consolidated statement of financial position.
For transferring fixed asset from Parent to Subsidiary at the end of reporting period following double entry should be performed:
Dr 8710 - for gain on disposal in parent's report Cr 0100 - for difference in actual carrying amount for group company Cr 8710 - for extra depreciation in subsidiary's report For transferring fixed asset from Subsidiary to Parent at the end of reporting period following double entry should be performed:
Dr 8710 - for gain on disposal in subsidiary's report
Cr 0100 - for difference in actual carrying amount for group company
Cr 8710 - for extra depreciation in parent's report
As for the main part of our research, when preparing the fixed assets consolidation report, determining the fair value of fixed assets on the balance sheet of the controlled enterprise, and when there is a mutual sale of fixed assets between the parent and daughter company, important consolidation requirements are fulfilled.
The process of fixed assets consolidation typically involves several steps, including:
Identifying entities: Determine the entities or subsidiaries within the organization that will be included in the consolidation process.
Gathering data: Collect the financial information of each entity, including details of fixed assets, such as their acquisition cost, depreciation, impairment, and any changes in valuation.
Adjustments and eliminations: Make necessary adjustments and eliminations to eliminate intercompany transactions, unrealized gains or losses, and any other intra-group balances or transactions that may distort the consolidated financial statements.
Valuation and revaluation: Determine the appropriate valuation methods for fixed assets, ensuring consistency across entities and compliance with relevant accounting standards or regulations.
Calculation of depreciation and impairment: Apply consistent depreciation methods and assess impairment of fixed assets based on relevant accounting standards.
Presentation in consolidated financial statements: Aggregate the fixed assets and related financial data from each entity into a single entity, presenting them in the consolidated financial statements [8].
Fixed assets consolidation provides several benefits, including:
Comprehensive view: Stakeholders gain a complete and accurate understanding of an organization's fixed asset base and its financial implications.
Comparability: Consolidated financial statements enable stakeholders to compare the performance, asset utilization, and financial position of the organization across different entities or subsidiaries.
Decision-making: Consolidated fixed assets information assists stakeholders in making informed decisions regarding investment, resource allocation, and risk assessment.
Risk management: Consolidated reporting facilitates better risk identification and management by providing a holistic view of an organization's fixed asset exposure and potential vulnerabilities.
CONCLUSION
Different consolidation procedures are used depending on the degree of control and influence of the parent firm on the group members. The term "full consolidation" refers to the consolidation of capital between the parent and subsidiary companies. The acquisition approach is used in the entire consolidation. The equity technique is used to consolidate the capital of associates, whereas the quota consolidation method is used to consolidate the capital of joint ventures.
After IFRS 3 review thereby was made easier the situation for practitioners and composers of the consolidated calculation. The company's management and the balance policy's creators lost their room for manipulation, so on the balance policy in
the field of full consolidation of the capital cannot be spoken about. Regulating one technique of entire capital consolidation also improves the consolidated financial statement's comparability. A wide range of criteria are utilized in the framework of such documentation, all of which must be taken into consideration in the final version of the reporting. As a result, consolidated reporting allows you to acquire the most comprehensive and accurate picture of the parent organization's financial condition and performance, as well as all organizations under its control, i.e., the objects are treated as a single economic unit. It's important to remember that the process of preparing consolidated financial statements is quite complicated, necessitating immediate preparation.
In the context of Uzbekistan, NAS and IFRS accounting policies may be converged to reduce the impact of the transition to IFRS on the financial results and IFRSs of companies that decide to do so [10]. This reduces the quantity of corrections in the first IFRS report. Among the main methodological recommendations for accounting policies to bring accounting closer to IFRS are:
- application of a single methodology for creating reserves for receivables and loans provided in IFRS cooperating with NAS;
- creating reserves in NAS in accordance with IFRS principles;
- regular inventory stock taking, write-off of illiquid stock;
- creating a reserve for litigation based on the principles of IFRS reservation;
- application of a single methodology for the creation and restoration of reserves for unused holidays.
The proposed double entry and new chart of accounts for the consolidation of fixed assets serve as a methodology for compiling reports.
Taking into consideration the findings, we believe that the establishment of a single methodology for the responsible authority's implementation of the consolidation process is essential. It ensures the quality and fair presentation of the consolidated financial statements by meeting all of these requirements.
REFERENCES
1. Law of the Republic of Uzbekistan. On accounting (new edition). April 13, 2016, 0RQ-404 https://lex.uz/ru/docs/-2931253
2. Resolution of the President of the Republic of Uzbekistan "On additional measures for the transition to international financial reporting standards" PP-4611 dated February 24, 2020 https://lex.uz/docs/-4746047
3. National accounting standard of the Republic of Uzbekistan No. 21 NAS. October 23, 2002, No. 1181 https://lex.uz/acts/417624
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