This results in less paperwork and less effort being expended to assess a parent company’s financial health.
Simplification – Consolidation software cuts out all transactions that occur between subsidiaries and the parent company since, in the grand scheme of the business, these things cancel each other out.
Benefits of Consolidated Financial Reports Consolidated financial reports are a GAAP requirement for good reason.
Some of the many benefits of consolidated financial reports include: Complete Overview – Consolidated statements allow investors, financial analysts, business owners and other interested parties to get a complete overview of the parent company.
SUMMARY: Consolidated financial statements can be complex to prepare, especially for parent companies that include many subsidiaries.
In the consolidated report, the transactions among subsidiaries or a subsidiary and a parent company are eliminated to avoid double counting.Claims and liabilities between Eurosystem central banks (intra-Eurosystem claims and liabilities) are netted and are therefore not shown.Explanation of individual balance sheet items (ECB/2016/34) This balance sheet is included in the ECB’s Annual Report and, as of 2014, is also published together with the Annual Accounts a few weeks before the Annual Report.Not only would it be hard to track down all these records, it would be extremely difficult to look over each of them and try to get an overall view of how the business is performing.
Consolidated financial statements cut this pile of reports down to just four consolidated reports.At a glance, they can view the overall health of the business and how each subsidiary impacts the parent company.