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Combined Financial Statements

what are proforma statements

Financial statements, as we know reveal the assets, liabilities, revenues, expenses and other important information about a company’s fiscal health. Financial statements, which provide information about the above, pertaining to, two companies or more than two companies, are referred to as combined financial statements.

Difference between Consolidated Financial Statements and Combined Financial Statements:

In case of a consolidated financial statement, the assets (can be referred to as a resource, owned either by a corporation or an individual, one which has an economic value); liabilities ( when a method known as accrual accounting, estimates a legal obligation) of the parent company’s affiliates and some of the details of the company are eliminated. This step is taken to prevent duplication.

Secondly, transactions between the parent company and the affiliates may have taken place. Such transactions are usually omitted. Once stocks from the parent company are acquired, the subsidiaries usually maintain a separate financial account. But in the case of

combined financial statements, the same process is not followed. There is no elimination of any details. In combined financial statements, the values pertaining to assets, revenues, liabilities are usually merged. Investment capabilities and credit responsibilities are not highlighted in combined financial statements.

Combined financial statements are prepared in the form of a table. The table has columns, each column depicting a particular field. The columns of combined financial statements show the affiliate companies or just one company, other columns include the transactions, which have undergone elimination, in addition to other fields present in the tabulated form.

Combined financial statements are documented by the Certified Public Accountants. The CPAs or the certified public accountants, prepare financial statements by following certain norms. These norms are referred to as GAAP or Generally Accepted Accounting Principles. However, there are instances when there are deviations from the GAAP. These deviation are recorded by the CPAs.

More Information Related to Financial Report

Category: Forex

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