Canada Consolidation Question

[andi01]

Two Questions.....

1) When we are preparing the consolidated balance sheet why do we take the common shares of the parent and not the common shares of the subsidiary?


2) When calculating Retained Earnings for the consolidated income statement why do we just take into accounting the R.E. of the parent and not the R.E. of the subsidiary in year 1?


Thanks!

 

[Triest123]

1) When we are preparing the consolidated balance sheet why do we take the common shares of the parent and not the common shares of the subsidiary?


2) When calculating Retained Earnings for the consolidated income statement why do we just take into accounting the R.E. of the parent and not the R.E. of the subsidiary in year 1?

=> (I) The invesment in subsidary (as shown in the Parent's book) is eliminated
against the "share capital & reseves" (as shown in the subsidiary's book)

(2) The pre-acquisition profit in the subsidiary's book belong to the "investment in
subsidiary" (as shown in the Parent's book), so it must be eliminated.