Consolidating accounts group
Both GAAP and IFRS have some specific guidelines for companies who choose to report consolidated financial statements with subsidiaries.
In general, the consolidation of financial statements requires a company to integrate and combine all of its financial accounting functions together in order to create consolidated financial statements that shows results in standard balance sheet, income statement, and cash flow statement reporting.
Some of those legal entities might be required to report information to local governments by using a government-mandated chart of accounts.
You can use consolidation accounts and consolidation account groups for this reporting.
There are however some situations where a corporate structure change may call for a changing of consolidated financials such as a spinoff or acquisition.
As mentioned, private companies have very few requirements for financial statement reporting but public companies must report financials in line with the Financial Accounting Standards Board’s Generally Accepted Accounting Principles (GAAP).
To enter additional consolidation accounts, use the Additional consolidation accounts form to create and maintain consolidation accounts for the combination of the consolidation account group and the main account that you specify.Companies who choose to create consolidated financial statements with subsidiaries require a significant investment in financial accounting infrastructure due to the accounting integrations needed to prepare final consolidated financial reports.There are some key provisional standards that companies using consolidated subsidiary financial statements must abide by.If a public company wants to change from consolidated to unconsolidated it may need to file a change request.Changing from consolidated to unconsolidated may also raise concerns with investors or complications with auditors so filing consolidated subsidiary financial statements is usually a long-term financial accounting decision.