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In the case of international subsidiaries, ensure foreign currencies are converted accordingly.

Eliminate the share capital the parent company holds in subsidiaries, because they are already part of the parent company’s capital structure.Add similar expense and liability items as well as income, owners’ equity and cash flows of the subsidiaries to those of the parent company.The rule of thumb is to make the financial statements of multiple entities appear like that of a single entity.Consolidated financial statements are group financial reports presented like those of a single accounting entity.The consolidation process converts the multiple financial reports of the parent company and its subsidiaries into a single, broad financial report.A parent company and its subsidiaries maintain their own accounting records and prepare their own financial statements.