Consolidating entries elimination

In business, consolidation or amalgamation is the merger and acquisition of many smaller companies into much larger ones.

Treatment to the acquired company: The acquired company records in its books the elimination of its net assets and the receipt of cash, receivables or investment in the acquiring company (if what was received from the transfer included common stock from the purchasing company).Avoiding these pitfalls can make a big difference to companies’ financial statements.The first common mistake is difficult to detect without knowing how the accounting system consolidates subsidiaries.After their acquisitions, these smaller companies, or subsidiaries, may have remained legally separate from the large corporation, or parent company.However, when reporting financial information, the parent company is required to submit financial statements that combine their information with that of their subsidiaries.

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