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Consolidation comes into existence where a Parent Company is holding more then% of the Equity or have control over the subsidiary by influencing its operational and Financial Activities.
Consolation in legal term do not have any existence such as one single entity , this is the reason consolidation is done to produce Financials so that the Stakeholder/Investors can worth and look at it as a single Entity
All intra Group Trading activities as eliminated, Such as Intra Sale/Pur, Intra Asset Transfer , Intra Loan etc.
when parent company has control over its subsidiaries then group consolidates financial statements are prepared.control may be achieved if parent company owns more than % shares .there are also other factotrs which may determine control.Any inter company transactions between the group companies are irrelevant
Consolidation accounting is the process of combining the financial results of several subsidiary companies into the combined financial results of the parent company. This method is typically used when a parent entity owns more than% of the shares of another entity.
