Balance sheet consolidation example

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Example

A was incorporated on 1 January 20X5. On 1 January 20X7 it acquired 100% of the ordinary shares in B which was incorporated on that day. Two years later, on 31 December 20X9, the balance sheet of the two companies were as follow.


balance sheet consolidation example

Prepare a consolidated balance sheet at 31 December 20X9 for A and its subsidiary.

Solution

balance sheet consolidation example solution

  • Non-current assets: $10,000 + $5,000 = $15,000
  • Net current assets: $5,000 + $3,000 = $8,000
  • Share capital: $10,000. The $5,000 investment in B appearing in the A balance sheet is cancelled by the $5,000 share capital in the balance sheet of A.
  • Accumulated profits: $10,000 + $3,000 = $13,000.

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4 responses to “Balance sheet consolidation example”

  1. Vicky

    How do you do a normal consolidated balance sheet for group accounts when there are have been no new acquisitions/disposals?

    For e.g. a holding company needs to prepare consolidated accounts for its subsidiaries.

    What are the double entries you have to post for the consolidation adjustments?

    Thanks

  2. KayKim

    I have purchased that advertised bookset. Just to know more about consolidation. There is no heading about consolidation and so far I couldn’t find anything about it and most of them are all basic accounting matters.

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