Are workpaper adjustments and eliminations entered on the parent’s books?

Are workpaper adjustments and eliminations entered on the parent’s books?
Are workpaper adjustments and eliminations entered on the subsidiary’s books?

Expert Solution

No, Workpaper adjustments are not entered in the general ledger of the parent or subsidiary entity. They are utilized in the arrangement of consolidated financial statements for a conceptual entity for which there are no conventional accounting records.An exemption happens when the changing sections include the remedy of a blunder. For example, if a parent company fails to record a dividend from a subsidiary. At that point, the workpaper entry is recorded in the parent’s separate books.

Workpaper procedures for the investment in subsidiary, revenue from subsidiary, and subsidiary equity accounts are similar as to the goals of combination. Despite the arrangement of the workpaper entries, t the conclusive outcome of changes for these things is to eliminate them through workpaper entries. As such, the investment in subsidiary, income from subsidiary, and the capital stock, additional paid-in capital, retained earnings, and other stockholders’ equity accounts of the subsidiary never show up in consolidated financial statements.

ekkarill92 answered 2 years ago

what is the sequence of workpaper adjustments and eliminations while preparing a consolidated financial statement?

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