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Successful businesses commonly encounter opportunities to grow through acquisitions -- by buying up competitors or other businesses.
In the context of financial accounting, consolidation refers to the aggregation of financial statements of a group company as consolidated financial statements.
The taxation term of consolidation refers to the treatment of a group of companies and other entities as one entity for tax purposes.
There may be amalgamations, either by transfer of two or more undertakings to a new company, or to the transfer of one or more companies to an existing company".Consolidation is based on the concept of 'control' and changes in ownership interests while control is maintained are accounted for as transactions between owners as owners in equity.IAS 27 was reissued in January 2008 and applies to annual periods beginning on or after 1 July 2009, and is superseded by IAS 27 Separate Financial Statements and IFRS 10 Consolidated Financial Statements with effect from annual periods beginning on or after 1 January 2013.When your business acquires a controlling stake in another, accounting rules require you to consolidate your financial statements.This is the case regardless of whether you absorb the new company or leave it operating as a separate business.[IFRS 10:1] The Standard: [IFRS 10:1] An investor controls an investee when the investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee * Added by Investment Entities amendments, effective 1 January 2014.