Consolidating two balance sheets
Consolidation by category: When the data in the source areas is not arranged in the same order but uses the same labels.
Use this method to consolidate data from a series of worksheets that have different layouts but have the same data labels.
Inventory sales in downstream transactions (from parent to subsidiary) are accounted for as internal transfers between departments of a single entity: Financial consolidation is more than just adding up numbers from separate financial statements.
This master worksheet might also contain sales totals and averages, current inventory levels, and highest selling products for the entire enterprise.
Intercompany transactions must be adjusted correctly in consolidated financial statements in order to show their impact on the consolidated entity instead of its impact on the parent or subsidiaries solely.
Understanding how intercompany transactions are recorded in each concerning entity’s journal entries and the impact of the transaction on each entity is necessary to determine how to adjust intercompany transactions in the consolidated financial statement.
The sheets can be in the same workbook as the master worksheet, or in other workbooks.
When you consolidate data, you assemble data so that you can more easily update and aggregate as necessary.
Consolidation by position: The data in the source areas has the same order, and uses the same labels.