[Anonymous]

Hi, all. I am puzzled with the elimination entries for consolidation statements:

For example, Parent bought 100% of Son in Cash, so the entry will be: Debit: Investment in subsidiary, Credit: Cash. During consolidation: The equity of Son (Son’s book) AND Investment in subsidiary (Parent’s book) are both eliminated. I understand the elimination of Son’s equity but don’t understand why Investment in subsidiary is eliminated. Don’t you think the elimination of Investment in subsidiry will understate the assets of the parent? The only explaination to this is on the consolidation statements, parent’s asset and liability INCLUDE son’s asset and liability??? I don’t think my Becker mention the consolidation of asset and liability. Any explaination is appreciated.