Know All about Consolidated Group Accounting for Assignment

Do you have financial accounting in higher studies? Then, you must study consolidated group accounting. It is one of the essential concepts of financial accounting. Now, you may need to write assignments on this topic too. Are you getting nervous? Not to worry as you can take help from accounting assignment help. However, you must know about the concept for your career, right? Once your concept is clear, you can write your assignment. Also, you can answer any question from this section in your exams.

Consolidated group accounting is the study of a parent company with many subsidiaries under its umbrella. So, it prepares the entire financial statement based on the performance of all companies. So, the stakeholders can get an idea about the financial condition from that financial statement. Thus, they can decide whether they will invest or not. Here, you will get a discussion on this matter.

Understand Consolidated Group Accounting

Before writing an assignment on this topic, you must understand it quite well. Here, the financial parent company provides a complete report of all companies under it. Thus, the shareholders, investors, customers, etc., get a compact and clear picture of the financial condition of all the companies under one parent company. The key terms you must understand of consolidated group accounting are-

Parent Company: It is the primary company that supervises other companies.

Control: It means managing the financial and operational decisions to get benefits from the activities of the companies.

Subsidiary: These are the companies under the parent company. The parent company controls these companies.

One can easily understand the group's financial condition through consolidated financial statements.

What Is the Importance of Consolidated Group Accounting?

Now, you have some idea of consolidated group accounting. Before writing your assignment, you must know its importance. Thus, writing an assignment will be easier. In simple words, consolidated group accounting provides a complete financial statement of all the companies under one parent company. The importance of it is-

It Helps in Making Decisions: This kind of statement provides a complete financial overview. Thus, the stakeholders get an idea about the group's financial performance and can plan to invest in it.

It Maintains Regulations: Many countries often look for consolidated financial statements to maintain subsidiaries and regulations throughout the companies.

It Reduces Any Difficulties: The stakeholders don't need to explain each company's financial statements. Instead, they can go through the parent company's report. Thus, they get an idea of the financial picture of all the companies they are interested in.

So, while you are writing an assignment, you must understand the importance of consolidated financial statements well. Thus, you can practically and theoretically get the implications of financial records.

Discuss the Principles of Consolidated Group Accounting

The next important thing you must know is the principles. You must understand these well to write the assignments. Read on to know more-

Control Principle: Consolidation is all about control. It is more than the ownership percentage. Therefore, when a parent company controls the operations and policies of the companies under it, it should also add its financial profit and loss.

Elimination of Intragroup Transactions: There must not be any transaction between the companies inside the group. It can create double counting. So, the companies must avoid any kind of sales, lending loans, or any such activities.

Complete Accounting Policies: All the companies inside the group must follow the same business policies, which allows them to be uniform.

Non-Controlling Interest (NCI): Often, the parent company doesn't own the entire subsidiary. In that case, the NCI holds a particular portion of the ownership. So, it must be shown separately in the equity section of the consolidated financial statements.

These principles ensure that the consolidated financial statement provides a correct view of the group's financial condition.

How to Prepare Consolidated Financial Statements?

Here are some key steps to help you prepare the statements. Have a look-

Know the Structure of the Group

l First, you must understand the subsidiaries as per ownership, agreement, and control.

l Now, you must find out the parent company. Also, you should understand the entities involved in this process.

Understand the Interest of Ownership

In this section, you must know the percentage of the parent company. Sometimes, the parent company doesn't hold 100% ownership. Then, you should know about the NCIs that hold the rest ownership of the group.

After that, you must divide the loss, profits, shares, etc. between the parent company and the NCIs according to the percentage of ownership.

Remove Any Outside Transactions of the Group

While making financial statements, you should not mention any individual financial dealings. It will create confusion. For example, often, a subsidiary sells something to a parent company. You must not mention it in the financial statement.

Combine the Financial Statements

Make a sum of all items, like assets, liabilities, etc., of the parent company and subsidiaries.

To do that, you can go for any adjustments to apply the financial policies equally to all.

If you find it difficult, you can take the help of the custom writing service. Thus, you will have a professional touch on your assignment.

Check out the Goodwill

This is the next important thing to consider. Sometimes, a parent company buys a subsidiary at the higher value of its net assets. It is known as Goodwill. You must add this to the consolidated balance sheet.

Prepare the Statement

Now, finally, it is time to prepare the consolidated statement. Here, you must prepare the balance sheet first. Then, be ready with the income statement. Also, you must keep the cash flow statement. When you are ready with all these documents, you can finally ready the statement, following the above steps. So, here you get the ways to prepare the statement.

Conclusion

So, here you get an overview of consolidated group accounting. It is an essential part of the study of financial accounting. The students of higher studies must go through this section to be ready for their future. Therefore, they must write assignments on this topic, too. So, to write an assignment, you must understand the topic quite well. If you find it difficult, you can take help from accounting assignment help. They are professionals. Also, they are experienced and experts. So you can get high-scoring assignments.