Question

to consolidate parent/subsidiary financial statements - when parent and subsidiary maintain separate accounting records and financial statements (acquisitions). What steps and considerations do I need to take? What accounts must I look for and address?

Answer 1

Ans Steps and consideration to be taken into accounts are as follows:

1. Intercompany transactions and profit or loss made on it should be eliminated from the intercompany consolidation.

2. Any amount of outstanding dues or receivables should be eliminated from both books.

3. Share of parent profit on subsidiary should be calculated and added to parent profit in consolidation.

4. Share of minority to be computed and shown as separate line item in the consolidated balance sheets under the equity head.

Major accounts to be checked are

1. Accounts receivable and accounts payable

2. Minority Interest

3. Investment account

4. Reserve and surplus