Under acquistion method, it says all of the assets, liabilities, revenues and expenses of the subidiary are combined w/ parents, but exclude intercompany transactions.
Can someone give me an example of an intercompany transaction?
The parent buys raw materials from the subsidiary.
Backward integration.
transactions between the investor and investee (acquirer and acquiree). Also, exclude only the portion of the transaction that still remains in either of their books. If a portion of the transaction has been realised through sales/revenue, then you dont have to reverse that.
To avoid double counting, otherwise the revenues would show up twice in the financial statements