Consolidated Statement of Cash Flow Question

HarleenQuinzel

So my Achilles heel is without a shadow of a doubt consolidated cash flows. To make this glaringly obvious I have been tasked with producing a consolidated cash flow for a client which incorporates numerous subsidiary entities. I need help...

A bit of background, the parent company was only incorporated during the period and then purchased subsidiaries, some of which have been set up for years and some of which were also incorporated during the period. The subsidiary financial statements were exempt from providing a statement of cash flow under FRS 102 as they are qualifying entities. The parent company's consolidated accounts also consolidate into the management accounts for the ultimate controlling party (which is in another country) but I have been told that this does not allow the parent to claim the exemption.

I originally did a statement of cash flow which showed the cash inflows and outflows of the parent and then the purchase of the subsidiaries under investing activities along with the cash acquired from the purchase of the subsidiaries. I have been told that this is incorrect.

In producing the consolidated statement of cash flow should I be including all inflows and outflows for the subsidiaries? In particular should it show an increase in assets (for the fixed and current assets acquired with the purchase of the subsidiary) and liabilities (for the loans payable acquired with the purchase of the subsidiary). The subsidiaries were purchased for the price of share capital so the purchase price does not consider the liabilities or assets of the subsidiaries.

Any advise would be greatly appreciated. Unfortunately I have asked around the office and the other accountants aren't able to give me solid advice on this, the auditor on the account is incredibly unhelpful and will tell you they want something but will not respond with any helpful advice on how to provide it (mostly just send on the FRS102 section 7 standard... so not very helpful at all). I'm only recently qualified and have not done any in depth cash flow statements in quite a while, even then I was never good at them!

Dell2009

Not an easy task

All income and expenses of sub's (outside of inter group transactions) should be included.

Investment in sub's and loans to/from group co's should not be included as they are eliminated on consolidation.

What package are you using to prepare?