Chapter 12, Problem 21Q

(a)

To determine

Balance Sheet: Balance Sheet summarizes the assets, the liabilities, and the Shareholder’s equity of a company at a given date. It is also known as the statement of financial status of the business.

Asset: Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue.

Stockholder’s equity: Owner’s equity refers to the right the owner possesses over the resources of the business. Revenues and the expenses are the components of the stockholder’s equity.

To Explain: The assets and stockholder’s equity balances which are eliminated during the preparation of the consolidated balance sheet of a parent and wholly owned subsidiary company.

b)

To determine

To Explain: The reason for eliminating those two items.