Technical Aspects of Consolidation Assignment Help
Learn about Consolidation Accounting with Technical Aspects of Consolidation Homework Help
In accounting, consolidation refers to combining the financial statements of subsidiary companies into the financial statement of the parent company. Consolidation may lead to one company acquiring another or two companies merging into one. Both of the processes are done in order to get a single entity for all purposes. Thus if you want to know about consolidation in detail, you will need technical aspects of consolidation homework help.
Understanding the technical aspects of consolidation
In order for a consolidation to take place, the companies should have a common base. This means either the same product or service or connected products. For example, a mobile phone company consolidating with another that manufactures phone batteries. Therefore consolidation accounting is done when two companies are part of a joint venture.
Consolidation combines all the individual resources, revenue, and expenditures into one and presents all as one single unit. This, in turn, reduces the risks and provides better ways to perform in the business. By using technical aspects of consolidation homework help, you get the exposure to different aspects of the consolidation procedure and learn from it.
The rules of consolidation
Consolidation depends on the percentage of ownership one company has over the other. Therefore the acquisition method used is based entirely on the ownership status.
- The company uses cost method if it owns upto 20% of the other company’s stock.
- If the company anything between 20 and 50%, it uses the equity method
- Consolidation occurs only when the company owns more than 50% of the other company’s stock.In this case, the company becomes the parent and gets the ownership over the subsidiary by combining the financial statements.
In other words, the parent company purchases the ownership interest in the other company, and this is listed as an investment in a subsidiary.
The experts at myhomeworkhelp.com have years of practice and experience in accounting. Therefore when you choose technical aspects of consolidation assignment help, they give real-life examples to make the explanation better.
An accountant has to follow certain set of rules when preparing consolidated accounting statements
- The equity accounts of the subsidiary that includes retained earnings, common stock, have to disappear
- The ownership interest created during acquisition, i.e., investment in subsidiary account has to be eliminated
- Due to several recordings in the company’s balance sheet, the accountant has to readjust the balance sheet of the subsidiary according to the current market value.
- There will be a change in the net asset value for which a goodwill account has to be created and recorded on the balance sheet.
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