This paper investigates and presents the theoretical and practical aspect of the process of drafting and the accounting treatment of consolidated financial reports on the actual day and the day after a business merger. Knowledge of the theory of consolidation required that the author research the relevant laws, professional books, journals, internet sources, whereas practical knowledge was acquired by analyzing particular financial reports and internal accounting data of the parent and subsidiary companies within the hotel group Sunce Koncern for the 2016 business year. The consolidated financial reports presented the financial situation, business performance and cash flow of the group as though it involved a single entity. These are drafted in accordance with the rules of International Accounting Standards and the Croatian Financial Reporting Standards. The obligation to draft the mentioned reports is placed on parent companies based on control over subsidiary companies within the group. Those using the information provided in the consolidated financial reports are the current owners, potential investors in long-term equity securities, banks, management boards of parent companies, economic analysts, the wider public and tax institutions. The drafting process consists of aggregating identical items in the particular financial reports belonging to the group’s companies, and elimination of internal transfers. Their advantage is that they present management performance for the group as a single economic entity, whereas the disadvantage is that business performance and the economic state of each particular company within the group is not evident. The advice to uses for a comprehensive overview of the state of the group is the combined use of consolidated financial reports and particular financial reports of the companies which make up the group.