International Accounting

Analyzing the theoretical basis of the consolidated financial statements concept

Vol. 21, Iss. 11, NOVEMBER 2018

Received: 29 August 2016

Received in revised form: 13 September 2016

Accepted: 27 September 2016

Available online: 16 November 2018


JEL Classification: G34

Pages: 1314–1328

Plotnikov V.S. Novosibirsk State University of Economics and Management (NSUEM), Novosibirsk, Russian Federation

Plotnikova O.V. Novosibirsk State University of Economics and Management (NSUEM), Novosibirsk, Russian Federation

Subject The article reviews the general economic hypotheses that define the conceptual framework for consolidated financial statements.
Objectives The study aims to analyze the use of general economic theories to justify the concept of consolidated financial statements.
Methods The analysis rests on the economic theory of ownership, theory of business entity, the concept of control of investor over the investee.
Results The new version of international standard on consolidated financial statements can be regarded as the final stage of work on the concept of consolidated financial statements. International standards do not provide for an analysis of theoretical foundations of any concept, while they determine the content of the concepts. In the analyzed standard we offer a new definition of control for all types of companies. We prove the need for transformation of qualitative characteristics of the Conceptual Framework for Financial Reporting into the structure of the concept of consolidated reporting, taking into account the specifics of operations of consolidated Group of companies.
Conclusions and Relevance The analysis of general economic theories allowed us to form the conceptual framework for consolidated financial statements. The functional division of property rights enables to analyze changes in such a complex area as relationships between owners, and to determine the level of control of each investor.

Keywords: economic theory, property right, ownership, consolidated financial statements, investment


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