A new employee has been given responsibility for preparing the consolidated financial statements of Sample Company. After attempting to work alone for some time, the employee seeks assistance in gaining a better overall understanding of the way in which the consolidation process works.

You have been asked to assist in explaining the consolidation process. The employee is asking you to respond to the following questions.

1. Why must the eliminating entries be entered in the consolidation worksheet each time consolidated statements are prepared?

2. How is the beginning-of-period non-controlling interest balance determined?

3. How is the end-of-period non-controlling interest balance determined? Provide an example.

4. Which of the subsidiary’s account balances must always be eliminated? Why?

5. Which of the parent company’s account balances must always be eliminated? Why?

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