Why this is mistaken
Parent and subsidiary ledgers continue to report their legal balances. Consolidation eliminations remove internal effects only from the combined reporting view. The correction shows parent, subsidiary, debit elimination, credit elimination, and consolidated columns with a reason for every entry. It repeats the eliminations each reporting period and does not hide them by netting the trial balances.
Where to watch
When this mistake may appear
- The intercompany receivable should be deleted from the subsidiary's books.
Check your work
Your work may contain this mistake if:
- Confuses reporting worksheet entries with legal-entity journal entries or nets balances without visible eliminations.