25/10/2016

25/10/2016

Consolidated Financial Statements: Answers To Your Questions (Part 1 of 3)

Where a group of companies are in place, it may be necessary for the group to prepare consolidated financial statements. The purpose of these financial statements is to present the figures of the company as if it were one single economic entity. Some of the fundamental points of consolidations are set out below;

When does a group relationship exist?

At its simplest, a group relationship exists where one company holds shares in a subsidiary company. Larger groups may have many subsidiaries, associates and joint ventures forming part of their group.

When a group relationship exists, do consolidated financial statements need to be prepared?

Depending on the size of the group and other conditions, the group may be exempt from preparing consolidated financial statements. The group will be exempt based on size if it meets 2 of the following criteria (as defined by the Companies Act 2014).

  • The balance sheet total of holding company and subsidiaries taken as a whole does not exceed €10m.
  • The amount of turnover of the holding company and subsidiaries taken as a whole does not exceed €20m.
  • The average number of persons employed by the holding company and its subsidiaries does not exceed 250.

It is important to note that in some instances, companies who fall below the size criteria will still have to prepare consolidated financial statements due to other criteria contained in the Companies Act 2014.

How should consolidated financial statements be presented?

Consolidated financial statements will generally show 2 sets of primary statements, the results for the parent company and also the consolidated financial statements of the group. The format is effectively the same as that of single entity accounts.

What Questions Do You Have?

We are happy to help. Please post your comment below or contact our friendly and knowledgeable team on 01 677 9000.  To keep in touch, connect with us on Linkedin. If this article helped you, please share it with other businesses.