Accounting and consolidating entry

To gain a complete picture of the entire organization, you combine (consolidate) all the assets and liabilities of each business unit, eliminating intercompany transactions and minority interest relationships by creating consolidation elimination journal entries.

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Reserves accumulated after acquisition are included in accumulated reserves of minority interest as appropriate.

Using a spreadsheet, the individual trial balances of the parent company and the subsidiary can be used to calculate the consolidated trial balance before preparing the consolidated accounts.

For example, assume Consolidated Manufacturing is a multinational company that has a controlling interest in a United States business, as well as numerous other subsidiaries worldwide.

The balance sheet for Consolidated Manufacturing lists its United States investment as an asset.

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