Unilever Company Case Study

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Reporting entities may invest in other companies for several reasons .The rapid pace of business demands revolutionary ideas and partnering with industry leaders is one path forward. Synergies established through investments may create value that could not otherwise be generated. Finally, readily available sources of financing may further encourage companies to seek opportunities to invest. When investing some companies may not wish to gain control of another entity (Associates) or may find it difficult to do so, in this case collaboration becomes the best solution (Joint venture), some may wish to gain control and as such operations or a business is purchased as a form of investment (subsidiary). Unilever’s Acquisitions The acquisition of…show more content…
A subsidiary is an entity that is controlled by another entity (known as a parent). Control means the ownership of more than one half (50 %) of voting power of the enterprise or control of the composition of the board of directors or such other governing body and its financial and operating policies. The principle for consolidated financial statements is the preparation and presentation of the financial information of a group of enterprises or entities (i.e. subsidiaries and parent) as those of a single economic entity. Consolidated financial statements are recommendatory, however the IFRS for SMEs requires the parent to present and prepare the consolidated financial statements in accordance with section 9. A parent is required to prepare consolidated financial statements if it not a subsidiary itself and does not have an ultimate parent that produces consolidated general purpose financial statements that comply with full IFRS or with IFRS for SMEs. The parent’s intention for acquiring the subsidiary must be to attain benefits from its activities and have no intention of selling it or disposing it off within one…show more content…
The 75% reimbursement of the construction of the factory and the implementation of the factories equipment to Talenti is a case in point of the government encouraging Talenti to continue with its operations in the community of Umzinto since it brings positive economic change such as job creation. The $750 000 reimbursement from the South African government must be recognized as a government grant. Conclusion Financial reporting sometimes falls short of both legal and ethical standards. These standards and requirements for accounting and financial reporting often change, one needs to be updated. The growing complexity of business transactions, and greater investor, regulatory and public scrutiny have all added to the demands on financial reporting. Obscuring the reality of reflecting the true business reality in the entity through its financial statements can have a chain of negative consequences affecting investors themselves, lenders, customers, suppliers and

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