Income Statement Consolidation
An income statement consolidation is the process of combining the income statement of a parent company with all of its subsidiary companies into one single consolidated income statement. The consolidated income statement presents the financial position of this single economic entity. There are 8 steps in the income statement consolidation process. These are the same […]
Operating Expenses Disguised as Inventory
Companies need to keep some amount of inventory. When I go to a home repair supplier, I expect them to have the copper pipe I need in stock. When I go to my local bakery, I expect them to have the macarons I crave in stock. When I go to my local grocer, I expect […]
A balance sheet consolidation is the process of combining the balance sheet of a parent company with all of its subsidiary companies into one single consolidated balance sheet. The consolidated balance sheet presents the financial position of this single economic entity. There are 8 steps in the balance sheet consolidation process. These are the same […]
Accounting for Business Consolidations
The economic entity principle implies that when a parent company acquires a subsidiary, their financial statements should be consolidated, because they are now a single economic entity. How does an accountant actually produce these consolidated financial statements? Read on. Acquisition by Cash, Equity or Both The purchase price is the total amount paid by the […]
Accounting Basics for Business Consolidations
Accounting Treatments for an Investment in Equity Securities An investment in equity securities occurs when a small business purchases some equity or ownership interest in another company. How this investment is treated in the accounting books depends on the extent of control the investing company has over the investee company. When there’s no significant influence […]
