The consolidated accounting of corporate profit: methodical aspect

The accumulation of reliable information about the financial condition of any corporation can be achieved by introducing the consolidated accounting to entities within the corporate structure and, in the future, by drawing up the consolidated financial statements. In constructing the system of consolidated accounting in large corporations, it is advisable to consider a number of its features, and in the first place, the need for the elimination of intercompany transactions carried out between organizations of consolidation circle. In forming the information system for stating and auditing financial results that would satisfy the interests of all groups of financial statement users it is important to eliminate the contradictions found in the accounting regulation system and the regulatory system. To accumulate information about not only the activity of the parent company, but also the activity of its subsidiaries and affiliates, it is suggested to complement the existing accounting scheme with the consolidated accounting system that is required to establish the relationship between indicators of individual and consolidated financial statements. Such an approach would reflect the facts of economic life within the consolidation circle, increase the level of control over the intercompany transactions, adjust the intercompany sales and retained earnings recognized as an asset. A form of transformational register of business transactions is suggested to solve the problem of eliminating the effect of double counting due to the redistribution of investments and intercompany transactions. The elimination procedure allows terminating the turnover of intragroup transactions and reflecting changes in due and resources of both an individual organization and an entire corporation. In this case, the data from the report on the adjustment of intercompany sales should correspond to the balance sheet. Balance adjustment depends on the method of accounting of products purchased by a consumer, and in future, on the use of this product - bargain item - in the organizations of consolidation circle. Various methods of balance sheet items adjustment are suggested depending on the amount of unrealized gains. The method for determining the retained earnings plays a significant role in the preparation of the consolidated financial statements. One of such methods is to synchronize the turnovers between organizations within the consolidation circle. Given the corporate-wide analytical data system, the synchronization can be carried out fully automatically by obtaining reports from the accounting systems of each organization group and comparing them. Using the proposed accounting system for internal transactions within the consolidation circle will allow for better intra-company transactions elimination and identification of unrealized gains and, consequently, preparation of consolidated accounts.

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