SCH-MGMT 523
Lecture Outline –Chapter 4
Consolidation techniques and procedures
1. Consolidating working paper format:
a) Consolidating pre-closing trial balances of parent and
subsidiaries
b) Consolidating financial statements (balance sheet, income
statement and retained earnings statement) of parent and
subsidiaries
2. Consolidating adjustments (CJEs)
The consolidating working paper entries in this chapter may be
summarized as follows:
(1) Restore the beginning of the period balance of the
Investment in S account, and remove the income and
dividends from S to P.
(2) Eliminate the beginning of the period Investment in S
account and the beginning shareholders’ equity of S. If
applicable, recognize the beginning unamortized cost
differential and the minority interest in S’s
shareholders’ equity.
(3) Update the minority interest for the current year’s
income and dividends from S.
(4) Allocate the unamortized cost differentials as of the
start of the period.
(5) Recognize the current period’s amortization of the
differentials.
Consolidating work
paper- financial statements
