Accounting consolidating financial statements divorced parents dating with kids
(Since the sales of electricity from NEP to MGC and the sales of gas from MGC to NEP are not earned outside of the economic entity they are eliminated.) The consolidated income statement will also report all of the expenses that were incurred outside of the economic entity.
(Since the purchases of electricity by MGC from NEP and the purchases of gas by NEP from MGC did not occur outside of the economic entity they are also eliminated.) The .
Consolidated financial statements combine the financial statements of separate legal entities controlled by a parent company into one set of financial statements for the entire group of companies.
Consolidated financial statements are the "Financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent (company) and its subsidiaries are presented as those of a single economic entity", according to International Accounting Standard 27 "Consolidated and separate financial statements", and International Financial Reporting Standard 10 "Consolidated financial statements".
For investors, a company's financial statements offers insight into the health of the company.
Accounting treatment of both combined and consolidated financial statement eliminates intercompany transactions.
In recent years, many companies have expanded by purchasing a major portion, or all, of another company’s outstanding voting stock.