- What is a consolidated balance sheet?
- Format and example of consolidated balance sheet
- How do businesses prepare consolidated balance sheet?
What is a consolidated balance sheet?
A consolidated balance sheet is a financial statement that shows the financial position of a parent company and its subsidiary companies. In simple words, a consolidated balance sheet is mere consolidation of financial details of all a subsidiary including the parent company and presenting as one balance sheet for the entire group.
A consolidated balance sheet is usually prepared by the business operating as a group of companies that have more than one subsidiary and it portrays the combined details of assets and liabilities.
Format and example of consolidated balance sheet.
P Ltd acquired Q Ltd on 1.1.2018. Their balance sheet as at 31.3.2017 is given below. Using this, let us prepare a consolidated balance sheet.
P Ltd Balance Sheets as at
31st March 2017
|
Liabilities |
P Ltd ( INR ) |
Assets |
P Ltd ( INR ) |
|
Share Capital : 10,000 Equity shares of Rs 10/- each fully paid 5,000 Equity shares of Rs 10/- each fully paid |
1,00,000
- |
Fixed Assets Investments : 4,000 Shares in Q Ltd |
80,000
40,000 |
|
General reserve |
40,000 |
Stock |
20,000 |
|
Profit and Loss Account |
20,000 |
Debtors |
25,000 |
|
Creditors |
10,000 |
Cash and Bank |
5,000 |
|
|
1,70,000 |
|
1,70,000 |
Q Ltd Balance Sheets as at
31st March 2017
|
Liabilities |
Q Ltd ( INR ) |
Assets |
Q Ltd ( INR ) |
|
Share Capital : 10,000 Equity shares of Rs. 10/- each fully paid 5,000 Equity shares of Rs. 10/- each fully paid |
-
50,000 |
Fixed Assets Investments: - 4,000 Shares in Q Ltd |
45,000
- |
|
General reserve |
10,000 |
Stock |
10,000 |
|
Profit and Loss Account |
10,000 |
Debtors |
10,000 |
|
Creditors |
5,000 |
Cash and Bank |
10,000 |
|
|
75,000 |
|
75,000 |
Consolidated Balance Sheet P Ltd and it is Subsidiary Q Ltd
As at 31.12.2017
How do businesses prepare consolidated balance Sheet?
A consolidated balance sheet is a key financial statement in the case of group companies. The financial statements of different companies belonging to the same group are consolidated to present the financial position as a whole.
Manually preparing a consolidated balance sheet involves several steps right from arriving at the share capital, profits, etc. and it is a tedious task. As a result, businesses have automated the task of consolidating financial information using accounting software. Thereby, a consolidated balance sheet is readily available when required. Not just consolidated balance sheet but also several other key financial and accounting reports can be consolidated with a click of a button.
Using TallyPrime, you can consolidate the entire books of accounts, view consolidated reports and seamlessly compare the parent and subsidiary companies' reports.
In TallyPrime, you can do this by creating a group company. It allows you to conveniently view all your companies in one place.
Group company creation in TallyPrime
Group company functions as a single economic entity, where financial reports such as balance sheet, profit and loss a/c, and trial balance are consolidated without any impact on the transactions and real-time basis.
Using the group company, you can compare the performance of your subsidiary companies and keep a tab on the overall business.
