Consolidating subsidiaries accounting


13-Apr-2018 10:44

Consolidation accounting helps overcome this problem by adding subsidiary financial statements to parent financial statements.

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Years ago Enron failed to consolidate entities that it effectively controlled, contributing to its fraudulent financial statements.

But the payments effectively meant that the banks should have consolidated the other entities as subsidiaries.

Investors complained that they didn’t know that the companies receiving payments even existed.

Periodically analysts question whether Molson Coors Brewing Company, which owns 42 percent of Miller Coors, should consolidate it.

Likewise, the Lenovo Group owns 45 percent of Beijing Lenovo Parasaga Information Technology Company but doesn’t consolidate it.

The FASB has issued guidance that is causing some entities to start consolidating subsidiaries.