16 Group accounting
‘I think a lot can be said for consolidation, but I think it should be done for the right reasons.’
Margrethe Vestager, Danish politician
In a nutshell
A group comprises a parent company and at least one subsidiary.
Company law (and accounting standards) requires a parent company to combine its results with those of its subsidiaries to present accounts as if it were a single entity. These combined accounts are referred to as group accounts or ‘consolidated accounts’.
Group accounting, at its simplest, involves adding together income and expenses from the profit and loss account of each company to produce a group profit and loss account, and the assets and liabilities from each balance sheet to produce a group balance sheet. ...