basic of consolidation
the financial information of the group incorporates the assets, liabilities, and results of northern Rock plc and its subsidiary undertakings (including special purpose entities). Entities are regarded as subsidiaries where the group has the power to govern financial and operating policies so as to obtain benefits from their activities. Inter-company transaction and balances are eliminated upon consolidation. The purchase method of accounting is use to account for the purchase of subsidiaries which are held at cost.