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As such, statutory consolidation is normally done through a merger. Statutory Merger: This kind of business consolidation occurs when the acquirer liquidates the assets of its target. Once done, the acquirer incorporates or dismantling the target company's operations.

Subsidiary consolidation involves reporting the subsidiary's balances in a combined statement along with the parent company's balances. The parent company will report the ?investment in subsidiary? as an asset, with the subsidiary reporting the equivalent equity owned by the parent as equity on its own accounts.

Consolidate financial statements by creating a balance sheet that reflects a sum of net worth, assets and liabilities. This is done by simply adding together the separate values from the balance sheets of the parent company and the subsidiaries.

Consolidated accounts are primarily for the benefit of stockholders, managers and directors of the parent company (if it has a controlling interest of 50% or more).

Common Consolidation Challenges Using inappropriate tools and systems. Many companies, even large organizations, use Excel to perform budgeting and reporting on a group level.Multiple ERP systems.Chart of account.Different currencies.Eliminations.Adjustments.Realizing that consolidation is complex.

Consolidation processes consist of the assembly of smaller objects into a single product in order to achieve a desired geometry, structure, or property. These processes rely on the application of mechanical, chemical, or thermal energy to effect consolidation and achieve bonding between objects.

Group consolidation is one of the most technically difficult areas for accountants, particularly when subsidiaries may be in different currencies, on different general ledger systems, or have differing charts of accounts.

The following steps document the consolidation accounting process flow. Record Intercompany Loans.Charge Corporate Overhead.Charge Payables.Charge Payroll Expenses.Complete Adjusting Entries.Investigate Asset, Liability, and Equity Account Balances.Review Subsidiary Financial Statements.

What Are the Rules of Consolidation Accounting? Declare minority interests.The financial reporting statements must be prepared in the same way for the parent company as they are for the subsidiary company. Completely eliminate intragroup transactions and balances.

Full consolidation, proportionate consolidation, and equity consolidation are the three consolidation methods. The consolidation process in accounting is used when the parent owns more than 50% of the subsidiary, while the equity method is used when the parent owns 20 to 50% of the subsidiary.