2 4 consolidationworksheets eliminationentries parent

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Unformatted text preview: e parent/ subsidiary/ consolidation worksheet Subsidiary: an entity in which another entity, known as its parent, holds a controlling financial interest. 2-4 Consolidation Worksheets Elimination Entries Parent Income Statement Subsidiary DR CR Consolidated Revenues Expense Expense Net Income Statement of Retained Earnings Retained Earnings (1/1) Add: Net Income Less: Dividends Retained Earnings (12/31) Balance Sheet Assets Total Assets Liabilities Equity Common Stock Retained Earnings Total Liabilities and Equity 2-5 Overview of the Consolidation Process In the consolidation worksheet, the three financial statements need to articulate. Net income from the income statement carries down to the statement of retained earnings. The ending balance in retained earnings carries down to the balance sheet. Elimination entries are entered into the “Elimination Entries” column (debit or credit) to eliminate any amounts that would result in “double counting.” 2-6 The Basic Elimination Entry: The Equity Method What needs to be eliminated? The subsidiary’s equity accounts The subsidiary’s dividends declared The parent’s income from sub account The parent’s investment account 2-7 Example ­ Overview of the Consolidation Process Simple...
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