Are assets for subsidiaries consolidated onto the parent’s balance sheet?
If the parent company owns more than 50% of a subsidiary, then the assets of that subsidiary must be consolidated. As an example, let’s say that Golden Gate Ventures has three subsidiaries. As you can see in the visual below, you would include the assets for Sonoma and Alcatraz in the consolidated financial statements since ownership is above 50%. Napa would be excluded since ownership is below 50%.
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What is an intercompany elimination?
When a company has income statement or balance sheet transactions between two subsidiaries, the activity must be eliminated in the parent company’s financial statements during consolidation. The company would record journal entries to neutralize the impact those transactions have on the financial statements. For example, if Aspen Ventures sold inventory to Gold Coast Brewery and […]