Introduction to consolidated accounts balance
sheet
sheet
There are two main problem
areas with consolidated balance sheets. The first of these is to be able to
carry out a consolidation when present with two or more balance sheets; the
second is to be able to deal with any adjustments that may be necessary to the
balance sheets presented Prior to consolidation for such items as inter –
company balances, assets adjustments, dividends et cetra.
areas with consolidated balance sheets. The first of these is to be able to
carry out a consolidation when present with two or more balance sheets; the
second is to be able to deal with any adjustments that may be necessary to the
balance sheets presented Prior to consolidation for such items as inter –
company balances, assets adjustments, dividends et cetra.
Technique – Assuming that the accounts are “correct” for
consolidation, the following method can be used to prepare a consolidated
balance sheet
consolidation, the following method can be used to prepare a consolidated
balance sheet
(a) Add together ALL fixed assets, current
assets, current liabilities and long term liabilities of all companies (with
the exclusion of the investment in the subsidiary company which will be dealt
later)
assets, current liabilities and long term liabilities of all companies (with
the exclusion of the investment in the subsidiary company which will be dealt
later)
(b) Enter the share capital of
the Holding
Company
into the consolidated balance sheet (C. B. S). The C. B. S. is prepared for the
benefit of the members of the Holding Company, therefore the only
share capital which will appear in it will be the share capital of the Holding
Company.
the Holding
Company
into the consolidated balance sheet (C. B. S). The C. B. S. is prepared for the
benefit of the members of the Holding Company, therefore the only
share capital which will appear in it will be the share capital of the Holding
Company.
(c) Analyze the share capital reserves of the subsidiary (ie)
between
between
(i) Those that existed at Date that the
equity share capital acquired (Transfer to “Cost of Control”);
equity share capital acquired (Transfer to “Cost of Control”);
(ii) Those
Reserves
which have accumulated since the equity shares were acquired. (Add
To It’s Own Reserve and show in C. B. S.).
Reserves
which have accumulated since the equity shares were acquired. (Add
To It’s Own Reserve and show in C. B. S.).
