Economic basis of balance sheet consolidation within the framework of international professional regulations

Vukša Slavko (Univerzitet za poslovne studije, Banja Luka), slavkovuksa@gmail.com
Milojević Ivan (Ministarstvo odbrane, Beograd), drimilojevic@gmail.com
Krstić Dalibor (Visoka škola za menadžment i ekonomiju, Kragujevac), dal.krstic@gmail.com

In economic theory, the term “balance sheet”is established and most often used instead of the term “financial statements”. Compiling a consolidated balance sheet based on the group’s accounting, i.e., the parent company and subsidiaries or holding companies, is a more complicated and therefore more difficult path, and its eventual choice would contradict the principle of efficiency. Therefore, it is generally accepted that the balance sheet of related companies is derived from the individual balance sheets of legally independent subsystems through the process of merging, eliminating, and supplementing balance, profit, and loss items, which is called consolidation. Information for monitoring real flows and nominal goods, expressed by presenting a complete and true picture of assets and results, is necessary not only for legally prescribed entities and their subsystems in the aforementioned sense but also for purely economic entities, such as the so-called groups, created by unification through financial or contractual ties of legally independent goals. This form of linking companies is known as a parent and subsidiary company, and the balance sheet prepared for these groups is a consolidated balance sheet.

Keywords: consolidation, balance sheet, company, financial statements, IFRS 10