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If you want to know about Consolidation methods, you first need to understand consolidated accounts and how to arrive as a result. Businesses opt for consolidation in order to earn better profits and combine small companies into one big unit. All of this can be tricky, and a deep analysis is required which now you can with consolidation methods homework help. You will not only understand the meaning of consolidation but also learn the methods a business uses in the process.
What is Consolidation method?
In accounting, consolidation method is when all the financial statements of a subsidiary are consolidated with the parent company. This method is effective only when the parent company possesses more than 50% rights on the subsidiary. All the accounting statements of the subsidiary are combined with the parent company to arrive at one single financial statement. Consolidation is mostly seen when the subsidiary is facing loss, or the parent company wants to make a bigger impact on the market.
Therefore with consolidation methods homework help, you will learn how a company exercises control over its subsidiary.
Difference between consolidation method and equity method
According to Generally Accepted Accounting Principles (GAAP), a company can use consolidated accounting only when the stake is above 50%. However, when the stake is less, but not lesser than 20%, the equity method of accounting is used. It is important to understand that the percentage of ownership decides the type of method to be used.
Let us see the difference between consolidation method and the equity method of accounting which you can find at myhomeworkhelp.com.
In consolidation method, the financial statements of the subsidiaries are combined with the parent company. Therefore, both the subsidiary and the parent company prepare the financial statements separately. In the end, the accountants will add both the income statements and make the necessary adjustments to arrive at a result.
In the equity method, the parent company becomes the investor, and thus the financial statements are not combined together. Instead, it is considered as an investment and records only those accounts upon which it can exert control.
Need for consolidation methods assignment help
As you can see from the above, a lot of steps are involved when a company decides to consolidate its accounts. There are certain criteria that need to be followed before the consolidation method. It becomes difficult to process the information and this when extra help becomes useful. You can get more information on the topic by checking myhomeworkhelp.com.
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