Consolidated Balance Sheet

Updated on June 25, 2024
Article byJyotsna Suthar
Edited byJyotsna Suthar
Reviewed byDheeraj Vaidya, CFA, FRM

What Is A Consolidated Balance Sheet?

A Consolidated Balance Sheet is a summarized statement showing the assets and liabilities of a parent company and its subsidiaries in a unified manner, treating all the companies as one under a common corporate banner. Its primary purpose is to combine the financial items of all entities and present them in a single balance sheet.

Consolidated Balance Sheet

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It is vital to corporate accounting standards as it facilitates the evaluation of an entity’s financial health. The consolidated balance sheet format is like the regular balance sheet. However, it does not list the assets and liabilities of the parent company and its subsidiaries separately. They are combined and presented in a single statement to offer a consolidated view to the stakeholders.

Key Takeaways

  • A Consolidated Balance Sheet gives stakeholders an overview of the financial position of an entity in a summarized manner, with financial information about all the subsidiaries included in the balance sheet of the parent company.
  • Investors, shareholders, and other stakeholders can get a quick picture of an entity’s performance.
  • International Financial Reporting Standard (IFRS) 10 defines the process entities must follow to prepare consolidated financial statements.
  • To prepare consolidated statements, gathering the relevant financial data of each subsidiary, using uniform accounting practices, and making the required adjustments, such as intercompany transactions, are some of the key steps.

Consolidated Balance Sheet Explained

A consolidated balance sheet in corporate accounting refers to a document that compiles the financial information (assets and liabilities) of a parent company and its subsidiaries. Since an entity’s financial information is combined in a single consolidated statement, it eliminates the need for multiple balance sheets.

The preparation of a consolidated balance sheet and income statement typically takes place at the end of a financial year. Hence, these consolidated statements are presented to a company’s stakeholders in its annual report. For instance, if mandated, Form 10-K, a report more detailed than general annual reports, may include the financial statements of the companies (along with its subsidiaries) listed on the stock exchanges in the United States. 

In May 2011, the International Accounting Standards Board (IASB) issued International Financial Reporting Standards (IFRS) 10 that stated how to define if a company must present its financial statements in a consolidated manner. It outlines the rules and principles that companies controlling more than one business or entity must follow while preparing and presenting their financial information.

International Accounting Standards (IAS) 27 defined the conditions for consolidation before IFRS 10 was introduced. IAS 27 offers additional details on how to prepare financial statements and disclose material facts of entities with combined statements. It also states how to deal with the preparation of financial statements for entities with investments in subsidiaries or joint ventures.

According to IAS 27, an entity preparing a consolidated balance sheet and income statement must have a controlling stake, or it must control the composition of the board of directors. It is important for companies to check which principles apply to them and act accordingly since the IFRS 10 supersedes IAS 27 in some cases.

Before preparing the consolidated statements for an entity, certain points must be considered. Let us briefly study them.

  • Upon acquiring a company’s full (or 100%) stake, the parent company need not list positive or negative differences (if any) between assets and liabilities. However, intercompany transactions must be considered to avoid accounting for the same transactions twice.
  • When a company has less than 100% ownership, the consolidated statements must separately list items not owned by the parent company under the category of non-controlling interest.
  • A parent entity must subtract non-controlling items from the consolidated profit and loss account to eliminate equity that the parent company does not own.

How To Prepare?

Conglomerates and multinational companies usually have multiple subsidiaries. In this section, let us study how to prepare consolidated statements for such companies.

  • Identifying subsidiaries/reporting entities: The first step to ensure accurate financial statement preparation is to identify subsidiaries correctly. The ownership interest must be studied at this stage to eliminate cases where a parent company has non-controlling interest.
  • Gathering financial information: The next step is to gather financial information of each entity for consolidation. It refers to individual balance sheets prepared in compliance with the IFRS and Generally Accepted Accounting Principles (GAAP) during the financial year. 
  • Checking reference information: Before integrating the financial information of the subsidiaries with their financial statements, parent companies must review all the balance sheets to ensure a reliable view will emerge upon consolidation. Following accounting standards and applying uniform accounting practices are crucial for consolidation.
  • Eliminating intra-group or cross-sales figures: This step involves eliminating cross-sales between subsidiaries to avoid double entries. By eliminating intercompany transactions, a parent company can ensure the accuracy and reliability of consolidated financial statements.
  • Making adjusting entries: Adjusting entries must be made to avoid counting any item twice. For instance, any investment a parent company has made in its subsidiary must be adjusted to ensure it is not duplicated in the entity’s records. 
  • Creating a consolidated balance sheet: The last step is to list the items in the trial balance and transfer them to the balance sheet. The item shareholder’s equity includes non-controllable interest/s to show equity that a parent company does not own.


The preparation of consolidated balance sheets can be challenging. Let us study some examples to understand the concept.

Example #1

Suppose Jenny is a senior accountant at Kutsuni Group, which is a conglomerate with more than 15 subsidiaries. Recently, it acquired three more firms, namely, TVG Ltd. (Subsidiary #1), Jusion Ltd. (Subsidiary #2), and Lusion Ltd. (Subsidiary #3). Now, Kutsuni Group must combine the financial information of these three newly acquired entities. Hence, Jenny works with the following information to ensure consolidation goes smoothly. 

  • Fixed assets (in million)

Subsidiary #1 = $10,000

Subsidiary #2 = $76,000

Subsidiary #3 = $36,700

  • Liabilities (in million)

Subsidiary #1 = $30,000

Subsidiary #2 = $96,700

Subsidiary #3 = $16,700

The total assets ($122,700) and liabilities ($143,400) were added to the balance sheet. Jenny also considered the profit and loss (retained earnings) of all three firms on the liability side. Unrealized gains and losses and other items were also adjusted on the respective sides.

Example #2

According to a March 2024 news update, Kelso Technologies Inc. published the audited consolidated financial statements and Management Discussion and Analysis for the year ended December 31, 2023. The news update further said that the audited year-end financial statements were prepared in line with International Financial Reporting Standards (IFRS) as per the International Accounting Standards Board (IASB) guidelines.

The figures were listed in United States dollars. The news article said that these financial statements were reviewed and approved by the company’s Board of Directors on March 20, 2024. Here is a snapshot of the said statements as shown in the article.

Audited consolidated financial statements 1
Audited consolidated financial statements 2

The images above show the various items contained in consolidated statements of entities with subsidiaries, including adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).


Consolidated balance sheets are crucial to the annual reports of entities with subsidiaries. They offer stakeholders access to financial data in one place. Let us understand why consolidated financial statements are important.

  • Save time and resources: These statements save time by eliminating the need for the preparation of separate balance sheets. As a result, they enhance resource allocations across companies.
  • Provide an overview of company performance: With these statements, investors, shareholders, and other stakeholders get a comprehensive view of a company’s financial position in one place.
  • Simplify reporting: This combined statement simplifies and streamlines the reporting process and facilitates audits. It improves the overall decision-making function in an organization.
  • Promote transparency and compliance: Consolidated financial statements ensure transparency where material facts and items are disclosed. As compliance increases, cases of fraud and financial mismanagement can be curbed.

Frequently Asked Questions (FAQs)

How to calculate minority interest in a consolidated balance sheet?

Minority interest refers to the portion of a subsidiary’s equity that a parent company does not own. Hence, the parent company only has partial ownership in a subsidiary. To compute minority interest, one must identify the non-controlling interest percentage and multiply it by the subsidiary’s net asset (total assets – total liabilities). The resultant figure indicates the claim of shareholders other than the parent company.

How to read a consolidated balance sheet?

A consolidated balance sheet includes two sides, namely, assets and liabilities. Firstly, the parent company’s assets are listed, followed by those of the subsidiary or subsidiaries. Liabilities are given the same accounting treatment. If required, the items may be segregated to offer stakeholders a clear picture of the company’s financial health.

Does goodwill appear on a consolidated balance sheet?

When a company acquires another entity by paying more than the fair value of its net assets, the difference is recognized as goodwill. Goodwill is shown on a consolidated balance sheet on the assets side. It falls under the category of intangible assets.

This has been a guide to what is a Consolidated Balance Sheet. Here, we explain how to prepare it along with its examples, and importance. You may learn more about financing from the following articles –

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