Consolidating subsidiaries accounting austin butler dating vanessa hudgens
The procedure for preparing subsidiary accounts for consolidation depends in part on how the closely the structure of the subsidiary chart of accounts reflects the chart of accounts of the consolidated company.Before you start a consolidation at the close of a period, perform the preparatory activities for the period closing, but do not close the subsidiary accounts until the consolidation is completed.Then assign an appropriate consolidation conversion principle to each ledger account in the consolidated company, and run the consolidation for all the subsidiaries.if the interest in a subsidiary undertaking is held with a view to resale, and has not previously been included in the consolidated accounts prepared by the parent company, that subsidiary may be excluded from consolidation; a subsidiary undertaking may be excluded from consolidation if its activities are so different from those of the other group undertakings that its inclusion would be incompatible with the obligation to give a true and fair view.
The economic entity concept in an accounting consolidation process refers to the idea that a company that owns more than 50 percent of another company can control its operations, management structure and strategic activities.
Often a parent company owns just less than 50 percent of a potential subsidiary’s shares, making it unclear whether control exists or not.
There is always a possibility that managers choose not to consolidate another company to hide performance results.
Consequently, a controlling company must consolidate all subsidiaries into a single entity.
For example, building on the prior example, Company A and Company B are in fact part of a single economic entity because top management at Company A controls Company B's managers and operating activities.