Consolidated versus consolidating financials

(Amounts owed and receivable between NEP and MGC are eliminated in the consolidated balance sheet.) This is a very brief overview of consolidated financial statements.It is a major topic within the university course and textbook entitled advanced accounting.

You must adjust the accounts on the general ledger to represent the ownership percentage of the parent company.These items are only shown on the individual financial statements for the individual companies.The acceptable accounting method for consolidation depends on whether the parent company has a controlling interest in the subsidiary.NEP acquires all of the stock of Midwest Gas Corporation (MGC). NEP is the parent company and MGC is the subsidiary company.

Each of these corporations will continue to operate its respective business and each will issue its own financial statements.

(Since the purchases of electricity by MGC from NEP and the purchases of gas by NEP from MGC did not occur outside of the economic entity they are also eliminated.) The .