PREPARING CONSOLIDATED FINANCIAL STATEMENTS : A LITERATURE STUDY

Abstract

The main objective of preparing Consolidated Financial Statements is to present the operating results of the financial position (including cash flow) of a holding company and its subsidiaries as if the group were one company with several branches. Preparing these financial reports can also reduce the need to prepare new financial reports. For example, a parent company has many subsidiaries, so many independent financial reports need to be reviewed. Therefore, consolidated financial statements make it easier for companies to read and evaluate their overall financial position. The type of research used in writing this article is literature study. References can come from books, journals, research report articles, and internet sites related to consolidated reports. Making consolidated financial reports has the same parts as ordinary financial reports, namely consisting of balance sheets, income statements and cash flow statements. The consolidated financial statements consist of several consolidated balance sheets, consolidated income statements, consolidated retained earnings statements, and consolidated cash flow statements. Preparation for making consolidated financial reports start by looking at the financial statements of the parent and subsidiary companies as a whole. Check records for errors or omissions and correct them. Adjust the report to exclude profit and loss statements between individual companies. Excludes subsidiary profits and dividends. Returns the balance of the subsidiary's investment account as the beginning balance of the period. Removal of residual balances from subsidiary statements, initially reflected in the parent company's financial statements. Removal of previously recognized capital from the subsidiary's finances. Perform settlement and depreciation of value differences. Remove other residues such as debts, income and expenses.