What are consolidating financial statements

They have now been included in F1 as an introduction to consolidated financial statements in preparation for the F2 exam.

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.

After their acquisitions, these smaller companies, or subsidiaries, may have remained legally separate from the large corporation, or parent company.

However, when reporting financial information, the parent company is required to submit financial statements that combine their information with that of their subsidiaries.

These documents are called consolidated financial statements and allow the health of the group to be assessed as a whole, rather than piece-by-piece.

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.

Meaning and definition of Consolidated Financial Statements Consolidated financial statements refer to the financial statements which lead to the subsidiaries of the holding company its summative accounting figure.

Putting another way, consolidated financial statements can be addressed as the combined financial statements of a parent company and its subsidiaries.

Preparing consolidated financial statements IAS 27 ‘Consolidated and separate financial statements’ defines a subsidiary as an entity that is controlled by another entity.

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