Consolidating two balance sheets

Consolidating two balance sheets

It is an important part of the financial statement along with the income statement and statement of cash flows.

The Balance Sheet reflects that how efficiently the funds of the entity are utilised to attain the maximum advantage.

It is at the discretion of the company as to use a stand alone Balance Sheet or a Consolidated Balance Sheet.

The external shareholders have to be made aware of a) Resource controlled by the parent b) Obligation of the group and c) the performance of the group with using such resources .

This objective is possible only through consolidated financial statement The companies which are having subsidiaries, Joint ventures and associates shall have to prepare consolidated financial statement, it presents the financial position, operating results and statement of cash flow of a group of companies.

The Consolidated Balance Sheet is prepared like a typical Balance Sheet, i.e.

as per Schedule VI of the Indian Companies Act, 1956, but there is no distinction made as to which asset or liability belongs to which particular company.

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Consolidation provides reporting as one single economic entity, the financial position and performance of a parent and its subsidiaries.

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