täyskonsolidoinnilla

Täyskonsolidoinnilla, or full consolidation in English, refers to a process in accounting where a subsidiary company is merged into its parent company, resulting in the elimination of the subsidiary's separate financial statements. This method is used to simplify financial reporting and provide a more comprehensive view of the parent company's financial position. Full consolidation involves the following key steps:

1. Elimination of the subsidiary's separate financial statements.

2. Reclassification of the subsidiary's assets, liabilities, revenues, and expenses into the parent company's financial statements.

3. Recognition of goodwill, which represents the excess of the fair value of the subsidiary's net assets over the cost of the subsidiary.

4. Adjustment of the parent company's financial statements to reflect the consolidation.

Full consolidation is typically used when the parent company has significant influence over the subsidiary, allowing it to control the subsidiary's operations and financial reporting. This method provides a more accurate representation of the parent company's financial position and is often required by regulatory bodies for publicly traded companies. However, it can also be more complex and time-consuming than other consolidation methods, such as partial consolidation or the equity method.