what is meaning of consolidated statement
The Consolidated Statement of Financial Position includes both assets and liabilities.. the parent’s claims on those resources (Equity), and parties outside the group of companies (Liabilities). The consequences of all intragroup transactions are removed since, from an economic standpoint, Assets and liabilities in the entity’s perspective cannot be calculated (e.g. Intragroup receivables and payable) solely from transactions inside the group, no interactions with third parties.
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consolidated statement definition
it is the financial statements of a company that has several divisions or subsidiaries. In financial statement reporting, companies frequently use the term “consolidated” loosely to refer to the aggregated reporting of their whole organization together. On the other hand, the Financial Accounting Standards Board defines consolidated financial statement reporting as reporting of an organization formed with a parent company.
purpose of consolidated financial statements
The goal of consolidated financial statements is to provide a comprehensive picture of portraying the results of operations and financial position of a parent and all of its subsidiaries as if the tight group were a single economic entity, particularly for the benefit of the parent’s owners and creditors.
how to prepare a consolidated financial statement
When creating consolidated financial accounts, the financial statements of the parent and its subsidiaries should be merged line by line by combining items of assets, liabilities, and income. as well as expenditures. To ensure that they are accurate, financial data on the group as if it were a single firm,
The following actions must be taken:
(a) the parent’s investment in every subsidiary; and the parent’s ownership stake in each subsidiary as of the date which investment should be made in each subsidiary eliminated;
(b) any excess of the parent’s cost of investment in a subsidiary over the parent’s share of the subsidiary’s equity, Should the investment in the subsidiary be done on the date specified? be referred to as goodwill to be recognized as an asset in the financial statements that are consolidated
(c) when the parent’s investment in a subsidiary costs it money. Less than the parent’s share of the subsidiary’s stock at the time the date on which the investment in the subsidiary is made; in the case of a discrepancy, it should be considered a capital reserve. financial statements that are consolidated
(d) minority stakes in consolidated subsidiaries’ net income should be recognized and modified for the reporting period
against the group’s income to arrive at the net income attributable to the parent’s owners; and (e) minority stakes in consolidated subsidiaries’ net assets. The consolidated balance sheet should be identified and included distinct from the parent’s obligations and equity shareholders. Minority holdings in net assets include:
(i) the equity attributable to minorities as of the date which a subsidiary investment is made; and
(ii) the minority’ share of equity changes since the date The parent-subsidiary relationship was established. Where the carrying value of the subsidiary investment is In addition to its cost, the carrying amount is taken into account for the goal of the preceding computations.
what is included in consolidated financial statements
Consolidated financial statements are financial statements that depict a parent’s and its subsidiaries’ assets, liabilities, equity, income, costs, and cash flows as if they were a single economic organization.