Process consolidating foreign currency subsidiaries
However, the consolidated financial statements are of limited use to creditors or minor stockholders of the subsidiary.
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Minority stockholders are not affected by the parent company’s operations, but they do benefit from the subsidiary’s strengths and weaknesses.
Therefore, because the subsidiary's stakeholders are more interested in the subsidiary’s individual financial statements than in the consolidated statements, company annual reports often include both the consolidated statements and the subsidiary statements, but never the parent's financial statements alone.
Companies that consolidate the results of foreign operations denominated in local currencies must translate the foreign financial statements into U. ASC 830 also applies to the translation of financial statements for purposes of consolidation or combination, or the equity method of accounting.
ASC 830 (aka FAS 52) provides the accounting and reporting requirements for foreign currency transactions and the translation of financial statements from a foreign currency to the reporting currency.
After their acquisitions, these smaller companies, or subsidiaries, may have remained legally separate from the large corporation, or parent company.