Ask the Accounting Community

  • 1.  Contrary Account

    Posted 10-12-2014 05:16 PM
    Do contrary balances between inter-companies exist in a consolidated year end balance sheet. Please explain
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    Mohammad Al Ghamdi
    Executive Officer
    Saudi Arabia
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  • 2.  RE: Contrary Account

    Posted 10-13-2014 09:30 AM

    A critical feature of 'consolidated accounts' is the necessity for each subsidiary company to agree their balances with each subsidiary. One should find that on consolidation they will balance each other out to zero. The reason is that trading between subsidiaries is 'internal' as far as the group is concerned. The consolidation only reflects 'third party trading'.


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    Clifford Moggs CMA
    Consultant
    Reading
    United Kingdom
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