Consolidation means combining two or more financial statements prepared by two or more different entities. International financial reporting standards require group companies to prepare and present group financial statements by consolidating all financial statements of individual components of the group.
As an example, the consolidated balance sheet is shown as follows:
|
Balance Sheet |
Corp A |
Corp B |
Consolidated |
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash |
200 |
350 |
550 |
|
Accounts receivables |
300 |
450 |
750 |
|
Inventories |
500 |
600 |
1100 |
|
|
|
|
|
|
Property Plant Equipment |
5000 |
7000 |
12000 |
|
Less: Accumulated Depreciation |
-1500 |
-2000 |
-3500 |
|
|
|
|
|
|
Total Assets |
4500 |
6400 |
10900 |
|
|
|
|
|
|
Total Liabilities and Equity |
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable |
500 |
650 |
1150 |
|
Accrued Expenses |
150 |
250 |
400 |
|
|
|
|
|
|
Long term loan |
2500 |
3000 |
5500 |
|
|
|
|
|
|
Share Capital |
1000 |
1500 |
2500 |
|
Retained Earnings |
350 |
1000 |
1350 |
|
|
|
|
|
|
Total Liabilities and Equity |
4500 |
6400 |
10900 |
The consolidation is required when an entity acquired control over other entities in a group. Control is acquired when a parent company acquires more than 50 percent of the shares of the target company.
This problem is a continuation of P5-33. Pie Corporation
Plumber Corporation acquired all of Socket Corporation’s voting shares on January 1
Master Corporation acquired 80 percent ownership of Stanley Wood Products Company on
The following are excerpts from the 2015 financial statements of Renault,
Plug Products owns 80 percent of the stock of Spark Filter Company
1. Which of the following is not a characteristic of a
Pie Corporation acquired 75 percent of Slice Company’s ownership on January 1
Purchase Corporation purchased 60 percent of Steal Company ownership on January 1
Paint Corporation owns 60 percent of Stain Company’s shares. Partial 20X2
Grand Delivery Service acquired at book value 80 percent of the voting
