Consolidating financials subsidiary


Investors want consolidated financial statements because they are interested in the wealth controlled by the parent company, much of which resides in controlled subsidiaries.

If the investor intends to profit from near-term (generally within than 12 months of initial investment) price movements, they are classified as either .However, if ABC or XYZ sells to an external business entity, then those revenues are part of the consolidated income statement.Similarly, raw material purchases from external suppliers and salaries are also part of the consolidated income statement.From a journalist’s viewpoint, most interesting article ideas stem from entities consolidating subsidiaries that they effectively control.Often a parent company owns just less than 50 percent of a potential subsidiary’s shares, making it unclear whether control exists or not.The consolidated balance sheet reports the assets, liabilities and shareholders' equity of the combined entities.

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