- Learn Basic Accounting in Less than 1 Hour!
- Accounting Basics
- What are Accounting Principles
- Accounting Cycle
- Accrual Accounting Basis
- Cash Basis Accounting
- Matching Principle of Accounting
- Conservatism Principle of Accounting
- Revenue Recognition Principle
- Prudence Concept in Accounting
- Cash Accounting
- What are Accounting Policies?
- Relevance in Accounting
- Accounting Estimates
- Mark to Market Accounting
- Prior Period Adjustments
- Cash Accounting vs Accrual Accounting
- Break Even Point In Accounting
- Operating Cycle
- Fiscal Year
- Fiscal Year vs Calendar Year | Top Differences | Examples |
- Financial Reporting
- Financial Statements
- Accrual vs Provision
- Accrual vs Deferral
- Temporal Method
- Interim Financial Statements
- Pro Forma Financial Statements
- Consolidated Financial Statement
- Audited Financial Statements
- Financial Statement Audit
- Internal Audit vs External Audit
- Interim Reporting
- Accounting Scandals
- Quality of Earnings
- Audit Risk
- Sunk Cost
- Leasehold vs Freehold
- IFRS vs US GAAP
- IFRS vs Indian GAAP
- Accounting for Fair Value Hedges
- Debit vs Credit in Accounting
- Single Entry System in Accounting
- Double Entry Accounting System
- Journal in Accounting
- Adjusting Entries in Journal
- General Journal
- Accounting Journal Entry
- Ledger in Accounting
- T Accounts
- Account Balance
- Journal vs Ledger
- General Journal vs General Ledger
- What is Trial Balance ? | Examples | Steps | Prepare | Errors
- Nominal Account
- Adjusted Trial Balance
- Reconciliation of Books | Types, Best Practices | Useful Tips
- Petty Cash | Meaning | Template | Accounting | Example
- Petty Cash Book
- Debit Note | Debit Notes Accounting & its Top Characteristics
- Credit Note
- Debit Note vs Credit Note | Top 7 Differences (Infographics)
- Drawing Account
- Balance Sheet
- Balance Sheet
- Balance Sheet Purpose
- Capital Expenditure Formula
- Statement of Financial Position
- Accounting Equation
- Assets vs Liabilities | Top 9 Differences (with Infographics)
- Equity vs Assets
- Trial Balance vs Balance Sheet | Top 10 Differences You Must Know!
- Balance Sheet vs Consolidated Balance Sheet
- Bank vs Company Balance Sheet
- Banks Balance Sheet
- Commitments and Contingencies
- Management Discussion & Analysis
- Revenue Reserve vs Capital Reserve | Top 7 Differences
- Revenue Reserve
- Capital Reserve
- Capital Receipts vs Revenue Receipts | Top 8 Differences
- Capital Lease vs Operating Lease | Top Differences You Must Know!
- Debt vs Equity Financing | Advantages | Disadvantages | Example
- Internal vs External Financing | Top 7 Differences (Infographics)
- Available for Sale for securities
- Held to Maturity to securities
- Non-Performing Assets (NPA)
- Cash and Cash Equivalents | Examples, List & Top Differences
- Cash Equivalents
- Restricted Cash
- 3 Types of Inventory | Raw Material | WIP | Finished Goods
- Ending Inventory Formula
- Average Inventory Formula
- Closing Stock
- Inventory vs Stock
- Current Assets
- FIFO vs LIFO
- First In First Out (FIFO)
- Last in First Out (LIFO)
- LIFO Reserve
- Non-Current Assets
- Accounts Receivables? | Definition, Accounting Examples
- Accounts Receivables Factoring
- Trade Receivables
- Net Realizable Value (NRV)
- Allowance for Doubtful Accounts
- Accrued Revenue
- Liquid Assets
- Quick Assets
- Marketable Securities on the Balance Sheet | Top Examples
- Trading Securities in Balance Sheet
- Prepaid Expenses
- Prepaid Insurance
- Tangible vs Intangible Assets
- Tangible vs Intangible
- Contingent Asset
- Tangible Assets
- Deferred Tax Assets
- Capital Expenditure (Capex)
- Capex vs Opex
- Salvage Value
- Residual Value
- Fixed Capital vs Working Capital | Top 8 Differences (Infographics)
- Impariment of Assets
- Negative Goodwill
- Goodwill Valuation
- Capitalized Interest
- Accounts Payable | Days Payable Outstanding | Formula |
- Current Liabilities | List of Current Liabilities on Balance Sheet
- Accrued Liabilities
- Accrued Interest
- Notes Payable
- Accounts Payable vs Notes Payable
- Revolving Credit Facilities
- Bonds Payable Accounting
- Bad Debt Reserve Allowance
- Deferred Expenses
- Deferred Tax Liabilities
- Unearned Revenue (Sales)
- Deferred Revenue (Income)
- Current Portion of Long-Term Debt (CPLTD) | Balance Sheet
- Long-Term Debt in Balance Sheet
- Financial Liabilities | Definition, Types, Ratios, Examples
- Long-Term Liabilities
- Accounts Receivable vs Accounts Payable
- Minority Interest
- Accounting for Convertibles
- Accounting for Derivatives
- Financial Lease vs Operating Lease
- Off balance Sheet Financing
- Finance vs Lease
- Bond vs Loan
- Triple Net Lease
- Debtor vs Creditor
- Shareholders Equity
- Shareholders Equity Statement
- Negative Shareholders Equity
- Par Value of Stock
- Share Capital
- Outstanding Shares (Definition, Formula) | Stocks Outstanding
- Additional Paid-in Capital on Balance Sheet
- Retained Earnings (Formula, Examples) | How to Calculate?
- Retained Earnings Formula
- Statement of Retained Earnings
- Appropriated Retained Earnings
- Unappropriated Retained Earnings
- How to Calculate Net Worth of a Company | Formula | Top Examples
- Owners Equity
- Preferred Shares
- Non-Cumulative Preference Shares
- Participating Preferred Stock
- Weighted average Shares average outstanding
- Share Buyback
- Accelerated Share Repurchase
- Restricted Stocks Units (RSUs)
- Contingent Shares
- Stock Splits Share
- Treasury Stock Shares
- Dilutive Securities
- Anti Dilutive Securities
- Stock Dividend
- Cash Dividend
- Final Dividend
- Preferred Dividends
- Homemade Dividends
- Ex dividend date
- Date of Record of dividends
- Qualified vs Ordinary Dividend
- Wealth vs Profit Maximization
- Cost of preferred Stock
- Common Stock vs Preferred Stock | Top 8 Differences You Must Know
- Stocks Vs Shares
- Stock Options Vs RSU
- Shareholder Equity vs Net Worth | Top 5 Differences You Must Know!
- Stock vs Option
- Stock vs Mutual Funds
- Income Statement
- Income Statement | Top Examples | Template | Format | Analysis
- Variable Costing Income Statement
- Pro Forma Income Statement
- Purpose of Income Statement
- Cost of Goods Sold
- COGS Formula
- Average Total Cost Formula
- Gross Profit
- Direct Costs
- Indirect Costs
- Prime Cost
- Duty vs Tariff
- Net Income Formula
- EBITDA Formula
- Operating Expense (OPEX)
- Interest Expense
- LTM EBITDA
- Non Recurring Items
- EBIT vs EBITDA | Top Differences | Examples | Calculation
- Depreciation – Formula | Types | Most Comprehensive Guide
- Depreciation Tax Shield
- Accelerated Depreciation
- EBITDA vs Operating Income
- Straight Line Depreciation Method
- Sum of Year Digits Method of Depreciation
- Declining Balance Method of Depreciation
- Land Depreciation
- Double Declining Balance Method
- Amortization of Intangible Assets
- Depreciation vs Amortization
- Unrealized Gains (Losses)
- Non Cash Expense
- Accrued Income
- Share based compensation
- Restructuring Cost
- Extraordinary Items
- Interest Income
- Double Taxation
- Net Loss
- Pro-Forma Earnings
- Margin vs Profit
- Net Operating Loss (NOL)
- Tax Shield
- Sundry Expenses
- Trade Discount
- Percentage of Completion Method
- Interest vs Dividend | Top 9 Differences (with Infographics)
- EBITDA vs Net Income
- EBIT vs Net Income
- EBIT vs Operating Income
- Operating Income vs Net Income
- Cost vs Expense
- Expense vs Expenditure
- Accounting Profit vs Economic Profit
- Income Tax vs Payroll Tax
- Tax credits vs Tax deductions
- Tax Evasion vs Tax Avoidance
- Regressive Tax
- Gross Income vs Net Income
- Profit vs Revenue
- Revenue vs Earnings
- Revenue vs Net Income
- Revenue vs Income
- Profit vs Income
- Revenue vs Sales
- Revenue vs Turnover
- Capitalization vs Expensing
- Income Statement vs Balance Sheet | Top 5 Differences You Must Know!
- Statement of Comprehensive Income | Items | Colgate Example
- Variance Analysis
- Other Comprehensive Income
- Partial Income Statement
- Income Summary Account
- FOB Destination
- Explicit Cost
- Implicit Cost
- Direct cost vs Indirect Cost
- Fixed cost vs Variable cost
- Price vs Cost
- Hard Cost vs Soft Cost
- Period Cost vs Product Cost
- Overhead Costs
- Nopat vs Net Income
- Marginal Costing vs Absorption Costing
- Marginal Cost Formula
- Margin vs Markup
- Markup Formula
- Contribution Margin vs Gross Margin
- Cash Flow Statement
- Statement of Cash Flow
- Cash flow from Operations | Formula, Calculations & Examples
- Operating Cash Flow Formula
- Cash Flow from Investing Activities (Formula & Top Examples)
- Cash Flow From Financing Activities | Formula & Calculations
- Cash Flow Analysis
- Pro Forma Cash Flow Statement
- Fund Flow Statement
- FFO (Funds from Operations)
- Direct vs Indirect Cash Flow Methods
- Cash flow vs Net Income | Key Differences & Top Examples
- Cash Flow vs Fund Flow | Top 8 Differences (with Infographics)
- Accounting Careers
- Accounting Interview Questions
- Financial Accounting Careers
- Top Accounting Firms
- Big Four Accounting Firms
- Forensic Accounting
- Cost Accounting
- Financial Accounting
- Accounting vs Engineering
- Finance vs Accounting
- Bookkeeping vs Accounting
- Accounting vs Auditing
- Accountant vs Actuary
- Bookkeepers vs Accountants
- Accounting vs Financial Management
- Cost Accounting vs Financial Accounting
- Cost Accounting vs Management Accounting
- Financial Accounting vs Management Accounting
- Public vs Private Accounting
- Accounting vs CPA
- Controller vs Comptroller
- Personal Banker Job Description
- Accounting Firms in Australia
- Accounting Firms in Canada
- Top Accounting Firms in US
- Accounting Firms in Singapore
- Accounting Books
Knowing about both of them is important since both are prepared in a different manner. Preparing a balance sheet is easy and all you need to put in your company’s assets, liabilities, and shareholders’ equity. But in the case of consolidated balance sheet, you need to include other items like minority interest.
In this article, we discuss the following –
- Balance Sheet vs Consolidated Balance Sheet [Infographics]
- What is Balance Sheet?
- What is Consolidated Balance Sheet?
- Key differences – Balance Sheet vs Consolidated Balance Sheet
- Balance Sheet vs Consolidated Balance Sheet (Comparison Table)
Balance Sheet vs Consolidated Balance Sheet [Infographics]
Balance sheet vs Consolidated balances sheet differences are as follows –
WallStreetMojo Free Accounting Course
You will Learn Basics of Accounting in Just 1 Hour, Guaranteed!
* Please provide your correct email id. Login details for this Free course will be emailed to you
What is Balance Sheet?
In simple terms, a balance sheet is a sheet that balances two sides – assets and liabilities.
For example, if ABC Company takes a loan of $10,000 from the bank, in balance sheet, ABC Company will put in the following manner –
- First, on the “asset” side, there will be the inclusion of “Cash” of $10,000.
- Second, on the “liability” side, there will be “Debt” of $10,000.
So, you can see that one transaction has two-fold consequences which balance each other. And that’s what balance sheet does.
Though, this is the most surface level understanding of balance sheet; once you understand it, we can develop this understanding.
Let’s understand assets first.
In assets section, we will first include “current assets”.
Current assets are assets which can be quickly liquidated into cash. Here are the items we will consider under “current assets” –
- Cash & Cash Equivalents
- Short-term investments
- Trade & Other Receivables
- Prepayments & Accrued Income
- Derivative Assets
- Current Income Tax Assets
- Assets Held for Sale
- Foreign Currency
- Prepaid Expenses
Have a look at the example of Amazon’s current assets –
source: Amazon SEC Filings
Non-currents assets are assets which pay off more than a year and these assets can’t be liquidated in cash easily. Non-current assets are also called fixed assets.After “current assets”, we will include “non-current assets”.
source: Amazon SEC Filings
Under “non-current assets”, we would include the following items –
- Property, plant and equipment
- Intangible assets
- Investments in associates & joint ventures
- Financial assets
- Employee benefits assets
- Deferred tax assets
If we add up “current assets” and “non-current assets”, we will get “total assets”.
Again in liabilities, we will have separate sections.
First, we will talk about “current liabilities”.
source: Amazon SEC Filings
Current liabilities are liabilities which you can pay off in the short term. Current liabilities include –
- Financial Debt (Short term)
- Trade & Other Payables
- Accruals & Deferred Income
- Current Income Tax Liabilities
- Derivative Liabilities
- Accounts Payable
- Sales Taxes Payable
- Interests Payable
- Short Term Loan
- Current maturities of long term debt
- Customer deposits in advance
- Liabilities directly associated with assets held for sale
Let’s have a look at the current liabilities of Amazon.com
Now, we will look at long term liabilities which are also called “non-current liabilities”.
Noncurrent liabilities are liabilities which the company will pay off in the long run (in more than 1 year time).
Let’s have a look at what items we will consider under “non-current liabilities” –
- Financial Debt (Long term)
- Employee Benefits Liabilities
- Deferred Tax Liabilities
- Other Payables
Below are the non-current liabilities of Amazon.
source: Amazon SEC Filings
If we total “current liabilities” and “non-current liabilities”, we will get “total liabilities”.
Now, we will talk about “shareholders’ equity” which will come under Liabilities.
Remember the equation of balance sheet?
Assets = Liabilities + Shareholders’ Equity
Shareholders’ equity is the statement which talks about the equity capital of the company. Let’s look at the format to get a better understanding of it –
source: Amazon SEC Filings
If we total “shareholders’ equity” and “total liabilities”, we will get the similar balance we ascertained under “total assets”. If “total assets” and “total liabilities + shareholders’ equity” don’t match, there’s an error somehow in any financial statement.
Also, check out Negative Shareholders Equity
What is Consolidated Balance Sheet?
Let’s say that you have a full-fledged company, MNC Company. Now you saw a small business, BCA Company which may help you produce goods for your business. So you decide to buy the company as a subsidiary of MNC Company.
MNC Company has now three options.
- MNC Company can let BCA Company run its operation autonomously.
- MNC Company can absorb BCA Company completely.
- Finally, MNC Company does something in between the first and the second option.
However, generally accepted accounting principles (GAAP) don’t give you any option. According to GAAP, MNC Company needs to treat BCA Company as a single enterprise.
Here you need to realize the value of consolidation. Consolidation means you would put together all the assets. For example, MNC Company has total assets of $2 million. MNC Company’s subsidiary BCA Company has assets of $500,000. So in the consolidated balance sheet, MNC Company will put the total assets of $2.5 million.
This is similar to all sorts of items that will take place on the balance sheet of each company.
Also, check out US GAAP vs IFRS
Rule of thumb
You may think how would you decide whether you should prepare consolidated balance sheet or not? Here’s the rule of thumb you should remember –
If a company owns more than 50% of another company’s share, then the former company should prepare consolidated statement for both of these companies as a single enterprise.
Concept of “Minority Interest”
source: Walt Disney SEC Filings
If a company owns the 100% of another company, then there’s no complexity. The parent company will create a consolidated balance sheet for parent and subsidiary company together.
The problem arises when the parent company owns less than 100% of the subsidiary company. In this sort of situation, the parent company consolidates the balance sheet as usual, but in shareholders’ equity, the parent company includes a small section “minority interest”. The idea is to claim all the assets and liabilities and to provide something back in the equity.
For example, if a company owns 55% of another company, a minority interest will be added (in the similar proportion) in the equity section. But all the assets and liabilities will be taken as 100%.
Also, have a look at this detailed guide to Minority Interest
An alternative to consolidated balance sheet
What a parent company does when it owns less than 50% of another company? In that case, the parent company would not create a consolidated balance sheet. Rather, the parent company will only include its own assets, liabilities, and shareholders’ equity. And the portion of interest in the subsidiary company as “investments” in the assets section.
For example, let’s say MNC Company owns 35% of stake in BCA Company. Now, MNC Company will prepare a balance sheet which is not consolidated. And at the same time, there will be no change in the assets, liabilities, and shareholders’ equity. But there will be 35% stake of investment (the amount would be similar) in the assets section.
Key differences – Balance Sheet vs Consolidated Balance Sheet
There are few key differences between balance sheet and consolidated balance sheet –
- Balance Sheet is a statement that balances between assets and liabilities. On the other hand, a consolidated balance sheet is an extension of balance sheet. In the consolidated balance sheet, the assets and liabilities of subsidiary companies are also included in the assets and liabilities of parent company.
- Balance Sheet is the easiest statement of all four statements in financial accounting. The consolidated balance sheet, on the other hand, is the most complex.
- To prepare balance sheet one needs to look at the trial balance, income statement, cash flow statement and then can easily sum up two sides of the sheet to balance assets and liabilities. Consolidated balance sheet takes a lot of time because it involves not only the parent company’s balance sheet but also the items in the subsidiary company’s balance sheet. Depending on the percentage of the stake the consolidated balance sheet is made. If the stake is 100%, a full consolidated balance sheet is prepared by the parent company. If it’s less than 100% but more than 50%, the parent company prepares the balance sheet different by including “minority interest”.
- Balance sheet is mandatory. If you own an organization, you must produce a balance sheet at the end of a financial period. Consolidation balance sheet, on the other hand, isn’t mandatory for every company. Even the parent company which owns less than 50% stake in any other company doesn’t need to prepare a consolidated balance sheet. Only the parent company which owns more than 50% stake in other company needs to prepare a consolidated balance sheet.
- If you can understand the concept of the balance sheet, learning consolidated balance sheet wouldn’t take much time. Consolidated balance sheet is just an extension of a balance sheet.
- Balance sheet and consolidated balance sheet, both are prepared according to GAAP’s accounting principles. The objective is to protect the investors from any sort of hassle. Balance sheet and consolidated balance sheet, both are prepared to disclose the right information to the potential investors so that they can make a prudent choice about whether to invest into a particular company or not.
Balance Sheet vs Consolidated Balance Sheet (Comparison Table)
|Basis for Comparison||Balance Sheet||Consolidated Balance Sheet|
|1. Definition – balance sheet vs consolidated balances sheet||Balance Sheet is an important financial statement of assets, liabilities, and capital for a particular period.||Consolidated Balance Sheet summarizes the financial affairs of parent & subsidiary company.|
|2. Objective||The main objective is to showcase an accurate financial position to external stakeholders.||The main objective is to reflect the accurate financial picture of an organization and its subsidiary.|
|3. Scope||The scope of balance sheet is limited and narrow.||The scope of consolidated balance sheet is much broader.|
|4. Equation||Assets = Liabilities + Shareholders’ Equity||Assets of (Parent + Subsidiary) = Liabilities ((Parent + Subsidiary) + Shareholders’ Equity + Minority Interest|
|5. Complexity||Preparation of balance sheet is very easy.||Preparation of consolidated balance sheet is much complex.|
|6. Time consumption – balance sheet vs consolidated balances sheet||Balance sheet doesn’t need a lot of time to prepare.||Consolidated balance sheet takes a lot of time to prepare.|
|7. Key concepts||Assets, Liabilities, & Shareholders’ Equity.||Assets, Liabilities, Shareholders’ Equity, & Minority Interest.|
|8. Adjustment||Balance sheet only balances the asset and the liability side of a single company since there’s no subsidiary.||Consolidates balance sheet balances both parent & its subsidiary company.|
|9. Pre-requisite||Every company needs to prepare a balance sheet.||Company that owns more than 50% share in any other company needs to prepare a consolidated balance sheet.|
Also, check out – Learn Basic Accounting in less than 1 hour
Conclusion – Balance Sheet vs Consolidated Balance Sheet
The basic difference between the balance sheet and consolidated balance sheet is that in consolidated balance sheet there is the inclusion of another company (which we call subsidiary). And that’s why the whole process gets complicated.
As a parent company, you may decide to do otherwise (for example, not preparing the consolidated balance sheet and letting the subsidiary company operate their own business); but you’re bound by the accounting principles of GAAP. And that’s why you need to prepare consolidated balance sheet if you own a stake of more than 50% in the subsidiary company.
I hope you understood the key differences between balance sheet and consolidated balance sheet. Which companies did you come across where you analyzed the two types of balance sheet separately? Do tell me about it in the comments!
- Deferred Tax Assets Examples
- Definition of Joint Venture
- What is Financial Accounting?
- How are Tangible Assets Valued?
- How to Analyze Current Assets?
- Top Best Differences Between Income Tax vs Payroll Tax
- Fundamental Analysis Meaning
- Balance Sheet vs Trial Balance
- Debt vs Equity Financing
- Bank vs Company Balance Sheet
- FIFO vs LIFO Accounting
- Capital Lease vs Operating Lease GAAP
- Top Differences Balance Sheet vs Income Statement
- Balance Sheet in Excel