The midsize manufacturing company for which you are the accounting advisor assessed the options you provided. The company has decided to purchase 100% ownership in an overseas subsidiary, as well as 75% ownership in a domestic subsidiary, which itself owns 10% of the parent company. Your company now needs to determine the steps involved in consolidating the financial statements and has asked for your input. Include an analysis of the steps required in translating foreign currency and the process of accounting for the connecting affiliation.

Directions

Specifically, you must address the following rubric criteria:

1. Describe the typical steps for consolidating the financial statements of subsidiaries.
2. Explain how the connecting affiliation should be handled.
3. Analyze the temporal and current rate methods of consolidating financial statements.
4. Determine which eliminating journal entries need to be made to account for intercompany transactions.