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Group accounting – Basic groups

Group accounting concepts

1.1 Group accounting definitions

An entity that is a parent is required to prepare consolidated financial statements.

A parent is an entity that controls one or more other entities

A subsidiary is an entity controlled by another entity.

Consolidated financial statements present the assets, liabilities,
equity, income, expenses and cash flows of a parent and its
subsidiaries as if they were a single economic entity.

Parent

Control

Subsidiary

The definition of control is considered later in the chapter. It is normally assumed that
a company controls another company when it owns more than half of the voting
rights.

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