Process consolidating financial statements


20-May-2020 01:33

On one hand, this presents a truer view of the companies by showing only financial activity with non-related parties.

However, it also hides the level of inter-company transactions.

I have described the consolidation procedures and their 3-step process in my previous article with the summary of IFRS 10 Consolidated financial statements, but let me repeat it here and follow these steps: After you make sure that all subsidiary’s assets and liabilities are stated at fair values and all the other conditions are met, you can combine, or add up like items.

It’s very easy when a parent (Mommy) and a subsidiary (Baby) use the same format of the statement of financial position – you just add Mommy’s PPE and Baby’s PPE, Mommy’s cash and Baby’s cash balance, etc. It’s a full IFRS learning package with more than 40 hours of private video tutorials, more than 140 IFRS case studies solved in Excel, more than 180 pages of handouts and many bonuses included.

She is the author of the bestselling "Numbers 101 for Small Business" books and "Piggy Banks to Paychecks: Helping Kids Understand the Value of a Dollar." She is a chartered accountant, certified management accountant and certified public accountant with a Bachelor of Arts in economics from Wilfrid Laurier University.

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I use it this way because for me it’s easier to verify and identify mistakes, but it’s up to you.Prepare consolidated statement of financial position of Mommy Group as at 31 December 20X4.Measure NCI at its proportionate share of Baby’s net assets.In a consolidated financial statement, each company's assets, liabilities and income are combined.

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Financial ratios based on combined numbers may not be representative of each company's ratios.Consolidated financial statements can give readers a misguided sense of profitability and financial stability in the absence of non-consolidated information.