Consolidating subsidiaries accounting
He lives in Durham NC with his awesome wife and two wonderful dogs.
Let’s be more practical today and learn some advanced accounting techniques.
Fraser Sherman has written about every aspect of business: how to start one, how to keep one in the black, the best business structure, the details of financial statements.
He's also run a couple of small businesses of his own.
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.
Please note here that in the above statements of financial position, .
I use it this way because for me it’s easier to verify and identify mistakes, but it’s up to you.
The one you use depends on how big a stake you have in the other business.Here’s the question: Mommy Corp has owned 80% shares of Baby Ltd since Baby’s incorporation.Below there are statements of financial positions of both Mommy and Baby at 31 December 20X4.If, instead, the company reports losses, you adjust the asset's value down.If you control the other company, you have to draw up consolidated financial statements.