Managing and reporting finances is an important component of running a successful business.
Once the company owns 50 percent of another company, then the company uses the acquisition method and must consolidate the financial statements.
A consolidated financial statement takes the financial statement of a parent company and its subsidiaries and combines them into one comprehensive financial statement.
When one company owns part or all of another company, it must account for this ownership interest in the other company.
The income statement, also known as the profit and loss statement, shows the profitability, or lack thereof, of a business over a set period.
The cash flow statement converts finances from accrual basis to cash basis and measures the flow of cash in and out of the business.