Consolidation of success

What does consolidation of success mean

Consolidation of earnings is a form of consolidation in the context of corporate accounting. The earnings position of the companies included is to be presented as if these companies were a single company as a whole (Section 297, Paragraph 3, Clause 1 of the German Commercial Code).

In accordance with this fiction, all effects on the group result that result from deliveries and services between the group companies must also be eliminated.

Income statement

In principle, all expenses and income from deliveries or services between the companies included in the consolidated financial statements 1b 5191 must be taken into account in the consolidated income statement and, if necessary, reclassified (Section 305 HGB). A distinction must be made between consolidation

Internal sales (Section 305 (1) No. 1 HGB) and
· The other income from intragroup deliveries and services (Section 305 (1) No. 2 HGB).

In the case of expense and income consolidation, the total cost method and the Expense of sales method be proceeded. The revenues from deliveries and services, ie the internal sales revenues between the companies included, are either in the consolidated income statement

· To offset against the expenses incurred or
· To be shown as other own work capitalized or as an increase in the inventory of unfinished and finished products (Section 305 (1) No. 1 HGB).

Consolidation can be omitted if the amounts to be consolidated are only of subordinate importance for conveying a true and fair view of the Group's asset, financial and earnings position (Section 304 (3), Section 305 (2) HGB).

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