Koondarvestus

Koondarvestus, often translated as consolidated accounting, is a process used by a parent company to combine the financial statements of itself and its subsidiaries. This creates a single set of financial statements that represents the economic performance and financial position of the entire group of companies as if they were a single entity. The primary goal is to provide a comprehensive view of the group's financial health, rather than just the performance of the individual companies within it.

The core principle behind koondarvestus is that the parent company controls the subsidiary. Control is typically established when the parent owns more than 50% of the subsidiary's voting stock, but it can also exist through other means, such as the power to appoint or remove the majority of the board of directors or the ability to direct the subsidiary's activities. When consolidation occurs, intercompany transactions, such as loans between the parent and subsidiary or sales of goods between them, are eliminated. This prevents double-counting and ensures that the consolidated financial statements accurately reflect transactions with external parties.

The consolidated financial statements typically include a consolidated balance sheet, income statement, cash flow statement, and statement of changes in equity. These statements are prepared in accordance with relevant accounting standards, such as International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). The process of koondarvestus can be complex, requiring careful attention to detail and adherence to specific accounting rules to ensure accuracy and compliance.