Consolidating financial statement

Consolidating shows detailed information by business unit of what makes up a total number, however Consolidated just shows the total figure.

For instance if company Z owns company A, B and C, then the consolidating financial statements will show the details of company A, company B and Company C, whereas Consolidated financial statements will just show the total of A B and C.

Such disclosures are: When a company purchases 20% or less of the outstanding common stock, the purchasing company’s influence over the acquired company is not significant.

(APB 18 specifies conditions where ownership is less than 20% but there is significant influence).

The taxation term of consolidation refers to the treatment of a group of companies and other entities as one entity for tax purposes.

Under the Halsbury's Laws of England, 'amalgamation' is defined as "a blending together of two or more undertakings into one undertaking, the shareholders of each blending company, becoming, substantially, the shareholders of the blended undertakings.

The deciding factor, however, is significant influence.For instance if company Z owns company A, B and C, then the consolidating financial statements will show the details of company A, company B and Company C, whereas Consolidated financial statements will just show the total of A B and C.ransactions where subsidiary entities bought and sold goods or loaned each other money.For example lets say we have Parent company P and subsidiary companies S and T. S would record revenue of ,000 and T would record expense of ,000.The company does not need any entries to adjust this account balance unless the investment is considered impaired or there are liquidating dividends, both of which reduce the investment account.Liquidating dividends : Liquidating dividends occur when there is an excess of dividends declared over earnings of the acquired company since the date of acquisition.

Leave a Reply