T K Lo & Co

Hong Kong CPA Firm


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Account - Circular



Revenue recognition is a very basic concept in accounting, but it still leads to a lot of disputes in practical application. Rather than preparing a comprehensive circular for the reference of clients, the annual seminar notes of our Partner, James and Assistant Manager, Manchi are helpful to give clients a more clear picture about revenue and their recognition.

The directors of Hong Kong companies are responsible for the preparation of financial statements in accordance with  the Hong Kong Companies Ordinance and one of the following standards issued by the Hong Kong Institute of Certified Public Accountants:
Hong Kong Financial Reporting Standards
, or
Hong Kong Financial Reporting Standard for Private Entities, or

Small and Medium-sized Entity Financial Reporting Standard (SME-FRS)

 
   
Consolidated Financial Statements

A parent company should prepare consolidated financial statements together with its subsidiaries, unless:

Under HKFRS-

u   being an investment entity measuring all subsidiaries at fair value through profit or loss, or

 

u  its [ultimate/intermediate] parent produces consolidated financial statements for public use  and complying with HKFRS or IFRS and:

l   being a wholly-owned subsidiary of another entity.

l   being a partially-owned subsidiary of another entity and duly complied with the procedures of notification and acquiescence of shareholders.

Under HKFRS of Private Entities-

its [ultimate/intermediate] parent produces consolidated financial statements complying with true and fair view framework of specified professional bodies and:

l   being a wholly-owned subsidiary of another entity.

l   being a partially-owned subsidiary of another entity and duly complied with the procedures of notification and acquiescence of shareholders.

l   being not material to the group as a whole in the exclusion of one subsidiary acquired with the intention of disposing of within one year.


Under SMEFRS 2015-
 

 it is exempt from the requirement to present consolidated financial statements in accordance with Section 19 of the SMEFRS 2015 on the ground of

l   being a wholly-owned subsidiary of another entity.

l   being a partially-owned subsidiary of another entity and duly complied with the procedures of notification and acquiescence of shareholders.

l   being not material to the group as a whole in the exclusion of [all/ the one and only one] subsidiary[ies] on aggregate basis.

  • involving expense and delay out of proportion to the value to shareholders of the Company and duly complied with the additional accounting disclosures in the financial statements and the procedures of notification and acquiescence of shareholders.