Question

. Describe what the consolidation process entails

Answer 1

Consolidation is the process of combining financial data from the several subsidiaries or business entities within an organization and rolling it up to a parent company for reporting purposes. It generally happens when the company holds more than 50% of shares of another entity.

It entails the following steps:

1)collecting the trail balance data from multiple general ledger systems and mapping it to a centralised chart of accounts.

2)consolidating the data following specific accounting rules and guidelines,such as IFRS.

3)Reporting results to internal and external stake holders.