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Determine which holdings to report as subsidiaries. Gather your paperwork together from all the companies. Coordinate fiscal periods.

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For the purpose of consolidated statements, a company is only considered a subsidiary if the parent company holds a controlling interest in that company. Generally, this means that the parent company owns over 50% of the shares of the subsidiary. This is because this share value would give them majority voting power in the subsidiary. However, there are situations where a company can be considered a subsidiary even when the parents owns a smaller percentage of their shares, such as:  The parent has majority voting rights by agreement with the subsidiary's board. The parent has power to govern the policies of the subsidiary under agreement or law. The parent has the ability to remove and replace the majority of the subsidiary's board. The parent has the ability to cast the majority of votes during a meeting of the subsidiary's board of directors.   In contrast, a parent may own more than 50% of a subsidiary's shares and not retain control. In this case, they are known as an "unconsolidated subsidiary" and not shown on consolidated statement. When you consolidate financial statements, you'll need all of the financial information for each company being considered. This will include information for the parent company as well. Specifically, you'll need access to the books (the record of all transactions) for each company, as books are not kept for the consolidated entity. It's easiest to start with the financial statements of the companies being considered if these have already been prepared. This will allow you to simply combine larger line items and go back through the books only to eliminate duplicate items. In order to consolidate financial statements, you'll need to be sure that all companies' financial reports refer to the same fiscal period. Generally, if there is a mismatch in fiscal periods, you should modify subsidiary's timeline match that of the parent. This should either be done at acquisition or can be done through an adjustment to the subsidiary's financial statements. For example, if a subsidiary considers August 31 as its year end and the parent company's year end is December 31, then prepare financial statements for the first subsidiary running from January 1 through December 31. This may involve significant adjustment.