How does consolidation worksheet adjustment facilitate consolidated income statement and balance sheet?

Answer 1

In preparing consolidated financial statements, an entity combines the financial statements of the parent and its subsidiaries line by line by adding together like items of assets, liabilities, equity, income and expenses. In order that the consolidated financial statements present financial information about the group as that of a single economic entity, the carrying amount of the parent’s investment in each subsidiary and the parent’s portion of equity of each subsidiary are eliminated. Intragroup balances and transactions, including income, expenses and dividends, are eliminated in full. Profits and losses resulting from intragroup transactions that are recognised in assets, such as inventory and fixed assets, are eliminated in full.
All the accounting entries needed to carry out the above eliminations are known as eliminating entries. You need to list out the balance sheet of the parent and subsids in separate columns in your worksheets, with separate worksheets for the income statements of the parent and subsids. Then you need columns for the eliminating entries to arrive at the final consolidated balance sheet and income statement. Without the eliminating adjustments, you'd end up doing the consolidation mentally which is impossible.