consolidation

Definition

Combining the financial statements of a parent company and its subsidiaries into a single unified report, eliminating intercompany transactions to avoid counting the same revenue twice. It's like merging family budgets while hiding the money you owe your brother.

Example Usage

The consolidation process revealed that half the parent company's revenue came from selling to its own subsidiaries at inflated prices.

Origin

Became necessary as corporate conglomerates emerged in the late 19th and early 20th centuries.

Fun Fact

Consolidation rules require eliminating transactions between subsidiaries, which occasionally reveals that companies have been enthusiastically buying from and selling to themselves.

Source: Corporate accounting standards

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