Consolidating your knowledge about consolidated accounts

01-Dec-2019 13:31

At the end of the year, Company XYZ's income statement might reflect a large amount of royalties and fees and very few expenses (because these are recorded on the subsidiary income statements).Thus, an investor looking solely at Company XYZ's holding company financial statements could easily get a misleading view of the entity's performance.These example sentences are selected automatically from various online news sources to reflect current usage of the word 'consolidate.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. How It Works Let's assume Company XYZ is a holding company that owns four other companies: Company A, Company B, Company C and Company D.Each of the four companies pays royalties and other fees to Company XYZ.

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which means "to combine into one body." Whatever the context, to consolidate involves bringing together some larger amount of items into a single, smaller number.

The consolidation was friendly in nature and lessened overall competition in the pharmacy marketplace.

A consolidation differs in practical terms from a merger in that the consolidated companies may also result in a new entity, whereas in a merger, one company absorbs the other and remains in existence while the other is dissolved.

Consolidation involves taking multiple accounts or businesses and combining the information into a single point.

In financial accounting, consolidated financial statements provide a comprehensive view of the financial position of both the parent company and its subsidiaries, rather than one company's stand-alone position.

GAAP dictates when and how companies should consolidate and whether certain entities need to be consolidated.