Consolidations adjustments (what are they and why?)

Solutions

Expert Solution

These are types of balance sheet - Standalone and Consolidated. Consolidated statements are the statement which consist results of two more associate entities. It is generally holding-subsidiary, where results of both the entities are presented in consolidated form, but there may be such transactions which are mutual these are intra-group transactions or inter company transactions. any loss and gains resulting out of such transactions must be eliminated (from the P&L as well as balance sheet) in order to reflect the true state of affairs. and these adjustments are consolidation adjustments

-because of these intra-group transactions the income of the entities are affected resulting the tax may not be properly calculated.

-if asset is sold between these two entities, the actual cost of purchase may not be reflected in books. and many more.

the Adjustment is made with the help of elimination entries. Intercompany elimination refers to the process for removal of transactions between companies included in a group in the preparation of consolidated accounts.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

What are the motives for business merger and consolidations?

Are bank consolidations a good thing? Discuss the pros and cons of bank consolidations. Your answers...

Are bank consolidations a good thing? Discuss the pros and cons of bank consolidations. Your answers should use economic logic.

Why is it necessary to make consolidation adjustments for intragroup transactions? In making consolidation worksheet adjustments,...

Why is it necessary to make consolidation adjustments for intragroup transactions? In making consolidation worksheet adjustments, sometimes tax-effect entries are made, why? Give an example about the tax-effect of intragroup transactions in catering services for airline industries.

Research budget neutrality. Explain what this concept is and why it is important when adjustments are...

Research budget neutrality. Explain what this concept is and why it is important when adjustments are made to Federal guidelines and rate calculations. Post your references using APA format.

Why are adjustments required? Describe the two categories of adjustments Provide two examples of each category...

Why are adjustments required? Describe the two categories of adjustments Provide two examples of each category and what accounts (i.e. asset, liability, expense or revenue) will be affected by these adjustments. Describe the expense recognition principle. What is another name for this principle. Describe and list the purpose of a contra-account. Provide an example to explain your description. What is the adjusted trial balance and why is it critical to the accounting cycle? Describe the difference between temporary and permanent...

1. a. What are the motives for bank consolidations (mergers and acquisitions)? b. Suppose Bank A...

1. a. What are the motives for bank consolidations (mergers and acquisitions)? b. Suppose Bank A buys Bank B and makes its subsidiary. Would shareholders of Bank A benefit from this acquisition? Does the answer depend on the motives for the purchase?

1. Please explain what accrued expenses are and let us know why these adjustments are necessary....

1. Please explain what accrued expenses are and let us know why these adjustments are necessary. Please provide an example of an adjusting entry for an accrued expense. 2. Please explain what accrued revenues are and let us know why these adjustments are necessary. Please provide an example of an adjusting entry for accrued revenues. 3. Please explain what an Unearned Revenue account is and why an adjustment may be necessary for Unearned Revenue. Please provide an example of an...

What kinds of adjustments should couples expect when they get married? Are these adjustments typically different...

What kinds of adjustments should couples expect when they get married? Are these adjustments typically different for men than they are for women (“his marriage” and “her marriage)? How so? If you are married or have fairly good knowledge about someone else’s marriage (e.g., a friend’s, your parents’), how does their experience compare with the text’s descriptions?

Why adjustments must be made at the end of an accounting period and give examples of...

Why adjustments must be made at the end of an accounting period and give examples of two adjustments. What must be prepared to check or verify that adjustments have been properly recorded ?

1. Why are adjustments needed on the worksheet? 2. Why do you adjust for supplies used?...

1. Why are adjustments needed on the worksheet? 2. Why do you adjust for supplies used? 3. What is depreciation? Why does it need to be adjusted? 4. Why is a worksheet useful in preparing the financial statements? 5. Why do you create a journal for adjusting entries? 6.What do you think happens to financial statements if this entry is not completed. 7. Do you think companies could get into trouble by not recognizing prepaid expenses? Answer each question in...

Subjects