Organizing Your Information Setting Up a Worksheet Combining Financial Statements Eliminating Duplicate Values Community Q&A Many large companies are partially or entirely made up of smaller companies that they've acquired throughout the years.
Consolidation accounting is the process of combining the financial results of several subsidiary companies into the combined financial results of the parent company.This method is typically used when a parent entity owns more than 50% of the shares of another entity.If a subsidiary uses a different currency as its operating currency, an additional consolidation accounting step is to convert its financial statements into the operating currency of the parent company.Given the considerable number of steps, it is useful to convert them into a detailed procedure, which the accounting department should follow religiously as part of its closing process.Otherwise, a key step could be missed, which would throw off the financial statement results.
Some of the tasks noted here can be automated, or at least made simpler, in order to produce financial statements more quickly.
However, to some degree, the higher level of precision required to produce more accurate financial statements requires additional consolidation effort, and therefore more time.
Related Terms Balance sheet overview Income statement overview Statement of cash flows overview What are consolidated financial statements?
The following page was not found: Please try searching for your content.
Let’s be more practical today and learn some advanced accounting techniques.
After summaries of standards related to consolidation and group accounts, I’d like to show you how to prepare consolidated financial statements .