Steps for preparing consolidated statements.
The consolidated statement is a statement prepared by the parent company in a group of companies, which summarizes the accounting statements of its subsidiaries and sets off the offset.
In the joint trading section, the report data is obtained from the perspective of the whole group. So how are the consolidated statements prepared?
Steps for preparing consolidated statements.
Step 1: Subsidiary Adjustment Stage (Adjusting Subsidiary Assets at Fair Value).
Step 2: Parent company adjustment stage (adjusting the value of the parent company's long-term equity investment according to the equity method).
Step 3: Prepare offsetting entries in the working paper.
Step 4: Prepare consolidated statements.
It's simple, just four steps. First of all, we must firmly remember these four steps, and know these four steps clearly in our brains.
In the future, it will not be difficult to compile consolidated statements. So, I will describe the detailed practice of these four steps below.
Let me first explain the meaning in parentheses above:
1. Adjusting the assets of a subsidiary at fair value refers to the assets of the subsidiary.
If the carrying amount of the property is inconsistent with the fair value, it shall be adjusted according to the fair value. (As mentioned above, it is a merger that is not under the same control, so it should be at fair value);
2. Adjusting the value of the parent company's long-term equity investment according to the equity method refers to the need to use it in the working papers.
The equity method readjusts the value of long-term equity investments, and writes the entries adjusted by the equity method in the working paper (business-to-firm.
The long-term equity investment of the controlled enterprise or subsidiary is to be accounted for according to the cost method, but it must be transferred when compiling the consolidated financial statements.
Replaced by the equity method, this is a typical adjustment of the balance sheet without adjusting the account, which means that the account book will not be adjusted, only written in the statement).