What is consolidated balance sheet

what is consolidated balance sheet

Other People Are Reading

The Balance Sheet

One of the fundamental financial statements of any business, the balance sheet serves as a snapshot of the business. It's made up of three sections: assets, liabilities and equity. Assets are those things the company owns. Liabilities are the company's debts and other financial obligations. Equity is the owners' stake in the company. The value of the assets on the balance sheet is always equal to the total value of the liabilities and the owners' equity. That's why it's called a balance sheet.

Consolidated Statements

Companies buy other companies all the time, and parent companies often leave their subsidiaries more or less intact, allowing them to continue operating as separate entities. However, securities regulations and accounting rules require parent companies to prepare consolidated financial statements. Consolidated statements present the financial information of the parent and all its subsidiaries together as if they were a single, fully integrated entity.

Consolidated Balance Sheets

A consolidated balance sheet combines the assets of the parent

and all of its subsidiaries into a singe "assets" section. It does the same with the liabilities of the parent and the subsidiaries. The equity section on a consolidated balance sheet generally represents the owners' stake in the parent company. The parent is the owner of the subsidiaries, so equity in the subsidiaries is automatically reflected in the equity of the parent.

Condensed Balance Sheet

A condensed balance sheet reduces the information from a standard balance sheet to a few lines. For example, the assets section of a typical balance sheet is divided into current and long-term assets. Current assets include cash, accounts receivable, inventories, securities available for sale and prepaid expenses. Long-term assets include property, equipment, intangible assets and long-term assets. A standard balance sheet would list all of these, line by line, in the assets section. A condensed balance sheet might just have three lines: current assets, long-term assets and total assets. The objective is to present only the most important figures and make them digestible in a quick glance.

Source: ehow.com

Category: Forex

Similar articles: