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Consolidation

consolidation

Consolidation

When an asset oscillates between a well-defined pattern of trading levels, it is said to be consolidating in technical analysis. Market indecision that lasts until the asset’s price moves above or below the trading pattern is commonly understood as consolidation. Price charts for any time can show periods of consolidation, which can extend for days, weeks, or months. Technical traders search price charts for levels of support and resistance before using these levels to decide whether to buy or sell. If news of a materially important nature is released or a string of limit orders is triggered, a consolidation pattern may be broken.

Consolidated financial statements are used in financial accounting to represent a parent and subsidiary company as a single merged company. A parent and subsidiary company are presented as one entity in a set of financial accounting accounts, which is known as consolidation. A non-controlling interest (NCI) may own the remaining shares of a subsidiary, with the parent firm potentially holding most of those shares. Alternatively, the parent may fully own the subsidiary, with no ownership held by any other company.

The subsidiary’s assets and liabilities are valued at fair market value to construct consolidated financial statements, and those values are applied to the combined financial accounts. The excess money is deposited to a goodwill asset account, and goodwill is gradually transferred into an expense account if the parent and NCI pay more than the net assets’ fair market value (assets minus liabilities).

Any transactions between the parent and subsidiary, or between the subsidiary and the NCI, are eliminated during a consolidation. Each of the companies continues to produce separate financial statements, and the combined financials only incorporate transactions with third parties.

 

 



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