Consolidation is used in technical analysis to describe the movement of a stock's price within a well-defined pattern of trading levels.Consolidation is generally regarded as a period of indecision, which ends when the price of the asset moves above or below the prices in the trading pattern.
The upper and lower bounds of the stock's price create the levels of resistance and support within the consolidation.
When that's the case, the company still consolidates its financial statements.
However, in the owners' equity portion of the balance sheet, the company maintains a separate account that tracks the value of the non-controlling interest in the subsidiary -- that is, the portion of the subsidiary business not owed by the parent company.
A resistance level is the top end of the price pattern, while the support level is the lower end of the pattern.
Once the price of the stock breaks through the identified areas of support or resistance, volatility quickly increases, and so does the opportunity for short-term traders to generate a profit.
When a CPA firm puts together the consolidated financial statements, ABC's net assets are listed with a value of $700,000, and the $300,000 amount paid above the fair market value is posted to a goodwill asset account.