What is a Consolidated Group?

A consolidated group is comprised of a parent company and all of its subsidiaries. Consolidated financial statements are issued for a consolidated group. The group may also file a consolidated tax return with the Internal Revenue Service.

Accounting for a Consolidated Group

In order to present consolidated financial statements, a parent company has to complete the following steps:

Convert the financial statement currency of each subsidiary to the home currency of the parent entity.
Identify and eliminate all intercompany transactions between the various entities.
Account for any non-controlling interests in the various entities.
Produce combined financial statements.