At this point, you can see that the financial results of A have ,000 of intercompany profit in them.
To consolidate is to combine assets, liabilities and other financial items of two or more entities into one.
In the context of financial accounting, the term consolidate often refers to the consolidation of financial statements, where all subsidiaries report under the umbrella of a parent company.
We also need to eliminate some or all of the cost of sales.
How much of the cost of sales depends on the profit amount and the amount of inventory remaining at the end of the year.
The company has operations in nearly 170 locations in 70 countries around the world.
Wärtsilä is listed on the NASDAQ OMX Helsinki, Finland.
Question: Rob, I don’t really understand how intercompany eliminations happen for business combinations. Can you explain the process and the journal entries to record the intercompany eliminations?
Remember that in a business combination, we are trying to eliminate any transactions between the parent and the subsidiary so that we only have transactions with 3rd parties left after our consolidating entries.
Wärtsilä Corporation is the parent company in Wärtsilä Group.