Consolidation of financial statements requires the parent company to prepare consolidated financial statements which are the result of merging the parent financial statements and the financial statements of all parent subsidiaries to present the financial position, performance and cash flows of the group as a whole. The consolidated financial statements must present the results of operations and financial position of the parent company and all subsidiaries as if they were a single company, and are presented in the basic financial statements containing the balance sheet, income statement, cash flow statement, statement of changes in equity and notes. Consolidation is also accompanied by certain laws and standards that taxpayers must comply in order to create correct consolidated financial statements that fairly, truthfully and accurately present the position of the company. The aim of this paper is to theoretically address the problem of consolidation of financial statements and to determine the principles for the preparation and presentation of consolidated financial statements when the entity controls one or more other entities. Also, the main goal is to present the consolidation of financial statements on a real example of the company and in a more realistic way explain the process of consolidation to experienced and inexperienced users of financial statements.