What
is consolidation?
Consolidation is combined
reporting of results and financial position of parent company and its
subsidiary.
How
accounts are consolidated?
The assets and liabilities
of parent and subsidiary are added in consolidation, similarly income and expenses
are also added up in consolidation. Share capital of parent is reported in
consolidated financial statement and consolidated reserve and minority interest
is calculated.
What
important features of consolidated financial statement?
There are three important
features of consolidated financial statement i.e. Goodwill, consolidate
reserves and minority interest.
What
types of books are maintained for consolidation?
Consolidation is a
technique for reporting the combined results of parent and subsidiary and
therefore no books of accounts are required for consolidation. The only
information require for consolidation is financial statement of parent and
subsidiary.
What
is purpose of consolidation?
The basic purpose of
consolidation is to show the group financial position and performance to the
equity holder of the group. The equity holder is not only interested in individual
performance of the parent but also the performance of its subsidiary.
