Adjusting entries consolidating statements

by  |  30-Nov-2016 05:47

There are three ways to account for the ownership interest: cost, equity and acquisition methods.

The type of method depends on how much of the second company the first company owns.

Intercompany eliminations (ICE) are made to remove the profit/loss arising from intercompany transactions.

No intercompany receivables, payables, investments, capital, revenue, cost of sales, or profits and losses are recognised in consolidated financial statements until they are realised through a transaction with an unrelated party.

A consolidated financial statement takes the financial statement of a parent company and its subsidiaries and combines them into one comprehensive financial statement.

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