CONSOLIDATED FINANCIAL STATEMENTS

Consolidation involves at least two entities, one of which that controls the other. There is sure to be intercompany profit or loss to be allocated between majority and minority interests. Majority interest holders equate controlling interest while minority interest alludes to non-controlling interest.

Speaking from the perspective of a parent selling to a subsidiary,  the event refers to a downstream transaction, whereby all profit or loss accrues to the parent company because the parent company records the

sale. In a downstream transaction, none of the gain or loss is recognized on the subsidiary’s books.