Question

what constitutes "consolidated financial statements. Explain the meaning of consolidated financial statements. the definition of consolidated financial statements from the FASB's Master Glossary. outline the year-end steps to comply with the new FASB statements.

Answer 1

Consolidated financial statement consist of two words i.e. consolidated + financial statement

Financial statement is statement which shows the financial position of business, which comprises of

1. Balance sheet in which assets and liability of n organisation recorded

2. Profit and loss accounts in which current year income and exppenses are recorded

3. Notes to accounts in which all the matter which are material in nature are represent here.

4. Statement in change in equity in which changes in equity is recorded

5. Cash flow statement in which all the inflow and out flow of cash during the current year recorded.

Consolidated means to combine into single form.

Hence, Consolidated financial statement means financial statement of organisation which comprises of multiple brances, subsidiaries or divisions. Company uses consolidated financial statement in respect of aggregate of financial statement of all branches and subsidiaries as a whole.

Consolidated financial statement should be prepared by using Generally accepted accounting principles (GAAP) and International financial reporting standard (IFRS). Both GAAP and IFRS have some specific guidelines for companies which should be follwed by all brances , subsidiaries and head office.

Hence, consolidated financial statement = Brances FS+ Subsidiaries FS+ HO FS.