10 - Group Accounts - The Consolidated Statement of Financial Position

Question 1

What makes a parent company a parent company?

Answer 1

Control of another company (more than 50% of the voting power)

Question 2

Why are group accounts prepared?

Answer 2

Investments in subsidiaries is valued at cost and there will be not indiction of performance in the parent companies accounts so the performance of the group is consolidated into one set of accounts

Question 3

Are intracompany transactions included in a set of consolidated accounts?

Answer 3

No

Question 4

Are investments in subsidiaries included in a set of consolidated accounts?

Answer 4

No - it is replaced by the net assets of the subsidiary and and good will. The share capital in the consolidated accounts is for the parent company only

Question 5

What is the accounting equation?

Answer 5

Net Assets = liabilities + Equity