Consolidation of accounts

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This query is : Resolved

Piyush Suhasaria (Querist)

28 February 2011 Suppose company A is the holding company of 4 companies b,c,d & e. Co. A is in EPC business and co. b,c,d & e does build operate and transfer(BOT) projects. total turover of A includes 20% external contracts and rest 80% from its subsidiaries. subsidiries give the construction of assets contract to A.

On consolidation how should intra group transactions be eliminated? Intra group transactions includes turnover in the books of A which are capitalised in the books of subsidiaries.

Please suggest the consolidation procedure for elimination of intra group transactions.

sandesh mundra

sandesh mundra (Expert)

28 February 2011 1. Sales to BCDE would be eliminated on one hand.
2. Cost of Goods sold in A pertaining to sales made to BCDE would also be eliminated.
3. Fixed Assets accounted in BCDE would remain as it is, only the profit portion (sales-cost of goods) would have to be eliminated from fixed assets value.
4. Depreciation would have to be recalculated.
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