Problem I

As controller of the Parent Company who is ready to prepare financial statements, you have the following information:

1.You, the Parent Company, have 141 subsidiaries or investees.

2.80 of these subsidiaries are located in the United States and are 100% owned and controlled by you (the Parent.)

3.20 of these companies are located in the United States but you only own 30% of the company.

4.40 of these subsidiaries are 100% owned and are located in the European Union, all of which use IFRS as their accounting framework. 39 of these 40 subsidiaries use the Euro to denominate their financial statements; 1 of the 40 subsidiaries do not use the Euro but use the Polish Zloty PLN to denominate financial statements.

5.One 100% owned subsidiary is in Denmark which does NOT use IFRS but uses Danish GAAP as outlined in the Danish Financial Statements Act of 2019. (See Note below)

REQUIRED:Please copy and paste the link, it works.

The answer should be in the form of a flowchart. Use 5 basic symbols such as illustrated in the below link.

https://www.edrawsoft.com/flowchart-symbols.html

What are the steps you would use (the Parent Company) to prepare consolidated financial statements for the parent company, the 121 100% owned subsidiaries, and the 20 companies in which you are heavily invested. [Consider IFRS, foreign currency; NCI, the temporal vs. the current rate method, and anything else you think is pertinent.]

NOTE:

https://assets.kpmg/content/dam/kpmg/dk/pdf/DK-2019/09/Overview-of-significant-differences-between-the-Danish-Financial-Statements-Act-and-IFRS.pdf

DANISH GAAP is different from IFRS as of 2019

Note: Below text is answer, but I need itin the form of a flowchart

Answer: ''There are several international subsidiaries of the parent company in this situation, so in order to prepare the consolidated financial statements, it is important, first of all to translate the foreign subsidiary's financial statements into the parent's reporting currency. For currency translation, i.e. current rate and temporal method, there are two types of methods. For translating self-sustaining operations, the current rate method is used, while the temporal method is used for translating integrated operations. Balance sheet items are translated using the practical currency closing rate, while income statement items are translated using the actual transaction date exchange rate or if not available, the average rate.

Combine the parent's assets, liabilities, profits, expenditures, equity products with the subsidiaries' assets.

Eliminate the carrying value of the investment of the parent in each subsidiary and the share of the parent of each subsidiary's equity.

Often, if the parent does not own 100% of the subsidiary's voting share shares, the value of the non-controlling interest is determined and the distribution of consolidated net profits between the parent and the non-controlling interest is made on the basis of their interest holdings. The combined balance sheet, on the other hand, includes the amount of non-controllable interest, i.e. the amount attributable to minority shareholders or foreign investors. It is important to measure combined retained earnings by removing the retained earnings of the subsidiary due to minority interest.

Any intra-group properties, liabilities, equity, expenditures, sales, cash flows resulting from transactions between the group entities shall be fully removed.''