This paper deals with issues concerning consolidation of financial statements arising from business mergers. The theoretical part of the paper describes annual financial statements, their comprehensiveness, importance, purpose and legal obligations. The paper emphasizes the process of consolidating financial statements, while the second part explains the concept of the consolidation of financial statements, determining the obligors, exemptions and consolidation procedures. The author has given particular attention to the process of preparing consolidated financial statements, i.e., the preparation of consolidated balance sheets, consolidated income statements and analyses of cash flow statements, statements of changes in equity, and analyses of financial indicators. The purpose of consolidated financial statements is to present operational results and the financial position of business entities with respect to their equity participation whereby the group is viewed as a single company with one or more subsidiaries or divisions. This paper analyses the entire consolidation process, where an interpretation of the results gives better insight to all interested users.