Financial Statements
Why IFRS?
Financial Reporting is about creating a basis for investors to predict the future.
Consolidated Statements
- group consists of: 1 parent company, 2 subsidiaries
- 3 individual financial statements of each (1 + 2)
- 1 economic entity financial statement ← relevant statement - combination of the entire group
- same rules as individual statement
- treated as if it was just 1 giant company
- all internal transfers are ignored → Intra Group Transactions
Internationality and Comparability
- group consists of: 1 parent company, 3 subsidiaries in 3 countries
- each individual subsidiary (and parent) must issue individual local statements
- group must issue IFRS compliant statement
- local statements translated to IFRS
- adding up translated statements
Why not complete IFRS in Austria?
- IFRS is not democratically created → 14 expert individuals
- in Austria not constitutional
- Tax Law is something deliberately not international
- conflict of insterest
Henkel Annual Report
- Corporate Governance Report
- Risks and Opportunities report
- Subsequent Events → what happened between 20**/12/31 and now?
- ad-hoc information → relevant to the shareholders
- World Show
- Henkel 2023 Report Analysis
Accounting Traditions
Anglo Saxon (USA)
- shareholder oriented → geared towards investors
- aims to create a stable profit for stable profit distribution
European
- tax and creditor oriented
- governments regulating the economy
- tax link → profit is very hardly linked to tax base
General Notes
- in Austria (and Germany) only Operating Profit (from Profit and Loss Statement) may be distributed → Dividend
- Dividends between companies are tax free → would be taxed multiple times then
- personal Dividend receivables are not tax-free
- 27.5% withheld at source → company deducts amount before sending it to you
- Withheld Tax
- like Income Tax Withholding, but for dividends
- Amazon has a very specific quote in it’s annual report: “when having the choice between showing profit and saving on tax we will always choose saving on tax”
- Distribution of Profits (dividends)
- Profit and Loss Statement is not effected → no tax deduction
- after decision: + liability, - profit in equity
- after payout: - liability, - cash
- liability cancels out in final balance sheet
- Alteration of Balance Sheet or other financial reports is a criminal offense
- Issuance of Shares: + equity, + cash
- in/decrease of share value: not effecting the balance sheet
- balance sheet can only be effected if new shares are issued