Do you have a majority shareholding in other companies? Are there economic interdependencies between parent companies and subsidiaries? Then your group of companies has reached a level of complexity where it is worth considering consolidated financial statements for the group of companies. Viewing all the companies in the group as one company (consolidation) shows the economic situation at a glance. This makes it easier to control the group of companies. In many cases, banks or investors demand more comprehensive reporting in the form of consolidated financial statements when the group of companies reaches a certain level of complexity, since individual observations are time-consuming and can lead to incorrect assessments without detailed information. And if a group of companies reaches a certain size, § 290 ff. of the German Commercial Code (HGB) applies. German Commercial Code (HGB), the obligation to prepare consolidated financial statements applies.

When consolidating the annual financial statements of the individual companies, the regulations and principles of the HGB apply. During consolidation, the group of companies is presented as one company in accordance with the principle of unity. For this purpose, the relationships between each other, e.g. between parent company and subsidiary, are eliminated. This means that the corresponding assets, liabilities, expenses and income are no longer included in the consolidation balance sheet and income statement.


Consolidation is at the heart of group accounting. In a complex process that ranges from the identification of subsidiaries and participations to the elimination of inter-company transactions and the preparation of consolidated financial statements. Consolidation creates transparency with regard to a company’s net assets, financial position and results of operations and a consistent presentation of financial performance. There are four steps to consolidating financial statements into consolidated financial statements:

The 4 Consolidation Steps:

  • Equity consolidation: In this important step of consolidation, the shareholdings between parent company and subsidiaries are recorded and the equity is offset. This ensures that only equity belonging to the parent company is reported.
  • The consolidation of receivables and liabilities: This involves offsetting the receivables and payables of the parent and subsidiaries against each other, as they do not exist in the group.
  • The consolidation of expenses and income: This consolidation step involves offsetting the expenses and income arising from the exchange of services between the parent and subsidiary companies. Since the financial statements show the group of companies as one, the income or expenses do not accrue.
  • Consolidation of intercompany profits: If the companies of the group of companies supply goods to companies of the same group of companies and these are still in the supplied company on the reporting date of the financial statements, the profit mark-ups of the supplying company are eliminated.

The clear presentation of the asset structure and the profit situation requires a uniform presentation of the individual companies. This applies to the accounting and valuation standards, to the balance sheet date and, if necessary, also to the currency if the group of companies is set up internationally. This can also present one or two challenges in detail.

The preparation of consolidated financial statements for your group of companies should be professionally prepared. With the right approach, the appropriate software support and a clever structure of the upstream systems, the consolidation of monthly and quarterly financial statements is also possible “at the push of a button”. Once implemented, planning data can also be mapped at the level of the corporate group.

The consolidated financial statements provide investors, creditors and other stakeholders with adequate information and a solid basis for important decisions. Therefore, consolidation should not only be seen as an obligation. The voluntary preparation of consolidated financial statements can have significant advantages for medium-sized companies: The central issue is transparency within the group of companies, since all business transactions are not only assessed in each of the trading companies, but also from the perspective of the group. The stakeholders benefit from this transparency because a concentrated view of the economic development is possible. The controlling possibilities increase significantly with the use of the right tool.

THE MAK`ED TEAM builds up your group accounting and consolidates the individual financial statements into a group financial statement according to appropriate standards with professional solutions. We prepare group financial statements along the entire process chain – from the individual financial statements to the commercial balance sheet and the consolidated financial statements. Here we mostly work with the software of the company LucaNet, of which we are a partner. The performance of this tool is adequate for all situations in accounting and controlling. With our expertise in accounting and group accounting, you will quickly achieve a good basis for the efficient preparation of your group financial statements.

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