Accounting

Consolidation accounting involves the process of grouping the financial records of several subsidiary companies into the combined financial results of the parent company. This method is used especially when a parent company owns the majority of voting shares of a subsidiary company or otherwise has contractual control of the subsidiary. The parent company prepares consolidated financial records by adjusting entries and eliminating intercompany transactions. In short, consolidation accounting is a process of combining assets, equity, liabilities and operating accounts of a parent firm and its subsidiaries into one financial statement.