Which of the following should appear in consolidated financial statements? a. All intercompany transactions properly recorded on each affiliate’s books. b. Transactions between the consolidated company and outside parties. c. Transactions not accounted for by the simple equity method. d. Lease transactions between a parent and subsidiary.
Which of the following should appear in consolidated financial statements?
|
a. |
All intercompany transactions properly recorded on each affiliate’s books. |
|
b. |
Transactions between the consolidated company and outside parties. |
|
c. |
Transactions not accounted for by the simple equity method. |
|
d. |
Lease transactions between a parent and subsidiary. |
Lets understand the basics.
Consolidation is a combining two or more figures into one number. In other words, it is combining two companies income statement and balance sheet into one income statement and balance sheet in company's term.
When inter company transaction is made then transaction needs to be eliminated because it is actually not actually exist in overall consolidation level.
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