Consolidating company accounts Rabpe xxx
There are five important rules an accountant must follow when consolidating.
First, the accounting must eliminate all of the subsidiary's shareholders equity accounts, such as common stock and retained earnings.
The taxation term of consolidation refers to the treatment of a group of companies and other entities as one entity for tax purposes.
When one company owns part or all of another company, it must account for this ownership interest in the other company.Below there are statements of financial positions of both Mommy and Baby at 31 December 20X4.Prepare consolidated statement of financial position of Mommy Group as at 31 December 20X4.These two methods do not lead to consolidating the financial statements.
Once the company owns 50 percent of another company, then the company uses the acquisition method and must consolidate the financial statements.Regardless of the method of acquisition; direct costs, costs of issuing securities and indirect costs are treated as follows: Treatment to the acquiring company: When purchasing the net assets the acquiring company records in its books the receipt of the net assets and the disbursement of cash, the creation of a liability or the issuance of stock as a form of payment for the transfer.