Consolidated statement

Consolidated statements or consolidated financial statements are documents that combine the results of several companies into one document. This statement includes the financial information of all subsidiaries, including any intercompany transactions, and presents the information as if it were from a single entity.

A consolidated statement typically includes a consolidated balance sheet, consolidated income statement, and consolidated cash flow statement. These statements provide an overview of the group's financial position, performance, and cash flow.

• Provides a complete picture of the group's financial performance: A consolidated statement includes the financial information of all subsidiaries, providing a more accurate and complete picture of the group's financial performance.
• Helps to identify any intercompany transactions: Intercompany transactions can distort a company's financial position and performance. A consolidated statement helps to identify these transactions and eliminate them from the financial statements, providing a more accurate picture of the group's financial position and performance.
• Helps to assess the group's financial position and performance: A consolidated statement provides an overview of the group's financial position and performance, which can help management make informed decisions about the group's future.
• Required by accounting standards: Consolidated statements are required by accounting standards, such as International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP), to provide a more accurate and complete picture of the group's financial position and performance.

Creating a consolidated statement is a complex process that requires specialized accounting knowledge and skills. Here are the steps involved in creating a consolidated statement:

• Step 1: Gather the financial statements of all subsidiaries: The first step in creating a consolidated statement is to gather the financial statements of all subsidiaries.
• Step 2: Eliminate any intercompany transactions: Intercompany transactions must be eliminated from the financial statements to avoid double-counting. For example, if a subsidiary sells goods to another subsidiary, the revenue, and cost of goods sold must be eliminated from the financial statements.
• Step 3: Adjust for any differences in accounting policies: Subsidiaries may have different accounting policies, which can impact the consolidated financial statements. These differences must be adjusted to ensure consistency across the group.
• Step 4: Calculate the consolidated balance sheet: The consolidated balance sheet is calculated by adding together the assets, liabilities, and equity of all subsidiaries and eliminating any intercompany transactions.
• Step 5: Calculate the consolidated income statement: The consolidated income statement is calculated by adding together the revenues and expenses of all subsidiaries and eliminating any intercompany transactions.
• Step 6: Calculate the consolidated cash flow statement: The consolidated cash flow statement is calculated by adding together the cash flows of all subsidiaries and eliminating any intercompany transactions.
• Step 7: Prepare the consolidated financial statements: The final step is to prepare the consolidated financial statements, including the consolidated balance sheet, income statement, and cash flow statement.