Section PS 2500 - Basic principles of consolidation

Effective date:

May 1, 1999

Published by the PSAB:

May 1999


This Section establishes standards on the basic principles of consolidation involved in preparing government financial statements.

Government financial statements are the financial statements of the government reporting entity. The government reporting entity, comprises government organizations. Government organizations include governmental units and government business enterprises.

Governmental units are consolidated in the financial statements and government business enterprises are included in the financial statements on a modified equity basis. Governmental units are included in a government's financial statements after their accounting policies have been conformed to those of the government. A similar adjustment is not required when including government business enterprises in the financial statements because under the modified equity method the accounting policies of a government business enterprise are not conformed to those of the government.

History of Section PS 2500




May 1999

New Section

This new Section outlines the basic steps of consolidation that would apply in the majority of government consolidations.

March 2012

Annual improvements

This Section is amended to clarify that any unrealized gain or loss attributable to the derecognition of financial assets and financial liabilities in the fair value category due to inter-governmental sales or transfers would be eliminated from the consolidated statement of operations.

Note: The above summary does not include details of consequential amendments made as the result of other projects.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.