Are all intra-entity tranasactions eliminated? Or some are recognized overtime?

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Expert Solution

Since the consolidated statements of the holding company and the subsidiary company are based on the universal assumption that the consolidated financial statements represents the financial position and operating results of a single company and a business entity. Under the all the inter-corporate transactions has to be eliminated because existence of any inter-entity transaction will count as double entry of a transaction. So, following the guidelines applicable in consolidation process:

Either company's all assets including current, liabilities including current, equity, retained earnings, sales, costs, and other incomes (or expenses) are combined and all inter-company accounts are eliminated.
Inter-company profit or loss on activities between divisions is eliminated, so that both companies profit or loss is presented in combination under single figure.
The combined financial results will be addressed by the holding company because the subsidiary company is a part of the holding company except minority shareholders interest which is presented separately.

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ekkarill92 answered 1 year ago

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