These statements, called consolidated statements, consolidate the parent’s financial statement amounts with its subsidiaries’ and show the parent and its subsidiaries as a single enterprise.According to, consolidated statements must be prepared (1) when one company owns more than 50 per cent of the outstanding voting common stock of another company, and (2) unless control is likely to be temporary or if it does not rest with the majority owner (e.g.
These statements are prepared for an individual business and provide a snapshot of the performance of the business for a specific period – monthly, quarterly, yearly, etc.
NEP acquires all of the stock of Midwest Gas Corporation (MGC). NEP is the parent company and MGC is the subsidiary company.
Each of these corporations will continue to operate its respective business and each will issue its own financial statements.
In other words, the consolidated financial statements agglomerates the results of the subsidiary businesses into the parent company's income statement, balance sheet and cash flow statement.
Accounting treatment of both combined and consolidated financial statement eliminates intercompany transactions.
In recent years, many companies have expanded by purchasing a major portion, or all, of another company’s outstanding voting stock.