Need help with consolidating financial statements
Managing your money is much easier once you consolidate your financial accounts!Consolidated financial statements make it easier to analyze the financial health of an enterprise with many subsidiaries.After a stock acquisition by the parent company, the subsidiary continues to maintain separate accounting records.But in reality, the parent company controls the subsidiary, so it no longer operates completely independently.Let’s take a look at some of the benefits of account consolidation. I primarily use USAA, but also have an online savings account with other banks because they have higher interest rates in the US at the moment .In addition, I have an account which I use for many online transactions and as a bridge to my Pay Pal account, and since USAA doesn’t offer business account, I have a business checking account at a local bank and an online business savings account for higher interest.
For example, the parent company must eliminate transactions among the parent and its affiliates for accounts receivable and accounts payable to avoid counting revenue twice and giving the financial report reader the impression that the consolidated entity has more profits or owes more money than it actually does.
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When a company owns all the common stock of its subsidiaries, the company doesn’t really need to publish reports about its subsidiaries’ individual results for the general public to peruse.
Shareholders don’t even need to know the results of these subsidiaries.