Consolidating balance sheet after acquisition
They have probably purchased many of them by acquiring entire companies. What rules must be satisfied for an acquiring company to record an intangible (previously owned by an acquired company) as an asset?A new subsidiary could very well have hundreds of intangibles: patents, copyrights, databases, smart employees, loyal customers, logos, and the like.
3rd Step Calculate of Minority Interest First of all we should know what minority interest is.Consolidated financial statements report the aggregate of separate legal entities.A parent company can operate as a separate corporation apart from its subsidiary companies.A casual review of business news won’t take long to reveal a story about one business buying another.Such acquisitions are common and number in the thousands annually.When the company is acquired, which of these intangibles are recognized on the consolidated balance sheet produced by the new parent?
Answer: FASB has stated that a parent company must identify all intangibles held by a subsidiary on the date of acquisition.
Under Indian Company Act , there is no need to prepare combined or consolidated final accounts of holding and subsidiary company in the books of holding company but holding company attaches the copy of balance sheet , one copy of profit and loss account and one copy of audit report of subsidiary company with his final accounts .
But for showing true financial position, often holding company prepare consolidated balance sheet.
Each of these entities reports its own financial statements and operates its own business.
However, because the subsidiaries are considered to form one economic entity, investors, regulators, and customers find consolidated financial statements more beneficial to gauge the overall position of the entity.
2nd step Add all the liabilities of subsidiary company with the liabilities of holding company.