What is a consolidated balance sheet?
Consolidated balance sheet is a compilation of information on the balance sheet of society and all its subsidiaries. Generally accepted accounting principles (GAAP) require companies with multiple trade divisions, special -purpose entities or partially owned subsidiaries to be included in the balance sheet information of the parent company. This consolidated statement allows banks, creditors or private investors to have a clear picture of the company's financial health. The format also represents a picture of the current asset and the company's balance. This information usually represents a wealth created by a company rather than its net income for the current accounting period. Banks and investors use this information to determine the value of the Company's assets and how much the company has spent on the purchase of these assets or operated the daily opera. While the consolidated balance sheet of parent companies is the most important for external users of financial information, it may also be interested in the balance sheet of individual subsidies withPolečnosti.
Most large or publicly held companies usually prepare individual financial statements for each subsidiary together with a consolidated financial statement. This individual financial statements may be included in the quarterly or annual reports of the company for public investors review. Individual financial statements also help managers determine how well every subsidiary works and the value that every subsidiary creates for the company. Managers can also measure individual balance sheets against a consolidated society to see a number of assets and obligations that every subsidiary contributes to overall business wealth.
In comparison of underestimation with maternity comconSolidated balance sheet, managers must remove all transactions between these financial statements. Transactions between a company do not represent transactions creatingsolving wealth; These are merely shifts of economic inputs or resources from one division of the company to another. To allow these transactions to remain a distortion of the overall economic wealth of society. Publicly held companies are usually held according to higher standards on these financial information.
During the 2001 accountants, Enron moved obligations and other negative accounting information from his consolidated balance sheet to a special entity. This made it possible to submit a stronger financial statement to investors and increase the amount of public investment. Once the public auditors discovered this accounting trick, Enron forced to rework their balance sheet, led to the possible fall and bankruptcy of the company falsified accounting information.