The document discusses principles of consolidation, including: 1) Consolidated financial statements combine the assets, liabilities, revenues and expenses of a parent company and its subsidiaries, eliminating intercompany transactions and balances. Minority interests in partially owned subsidiaries are also included. 2) When a parent company acquires a controlling interest in another company, a parent-subsidiary relationship is established where the subsidiary remains a separate legal entity but becomes part of the economic unit represented by the consolidated financial statements. 3) Goodwill arises when a parent pays more than the book value of a subsidiary's shares, representing the cost of control. A capital reserve arises if less is paid than book value.