Think about a situation. You have invested in the equity of the company say Z Ltd. your stake is five percent. So whatever company is earning, its five percent belongs to you. It is quit easy for us to calculate you earning per share from the profit and Loss Account of the company. But imagine if the company has invested into forty five percent of capital of another company say A Ltd. now whatever A Ltd. is earning, its forty five percent belong to Z Ltd. and five percent of it belongs to you. At the same time the forty five percent of total net assets of A Ltd. is of Z ltd., whose five percent is your in addition to five percent of net asset of Z ltd. isn’t it becomes vary confusing, because to calculate your actual earnings per share. As well as your share in Net Assets of your company, which has investment in other companies too? Situation becomes more complicated if your Parent company has invested in more than one company. We might have to go through with the financial statements of all those companies in which investment has been made by the Parent company. So to come out from these difficulties and to make situation more easier, the concept of Consolidated financial statement has emerged which makes easy to calculate your share in profit, Net Assets and earnings per share taking into count the investments made by the parent company. This all calculation is done by parent company in the form of Consolidated Financial Statements.

KEYWORDS: Consolidated Financial Statements, Subsidiary Company, Associate Company.