#46 Combined Financial Statements

Question 1

Combined financial statements may be used to present the results of operations of:

A. Unconsolidated subsidiaries
B. Companies under Common Management
C. Both

Answer 1

C. Both

Question 2

In a combined financial statement for ABC company and BCD company, if ABC company has an ownership stake in BCD company, how would this effect the total amount of owner’s equity reported in the combined financial statement?

Answer 2

ABC’s investment in BCD company would need to be eliminated from the combined owner’s equity.

Question 3

If problems associated with minority interest, foreign operations, different fiscal periods or income taxes occur during the preparation of combined financial statements, they should be treated in the same manner as in the preparation of consolidated financial statements.

True or False

Answer 3

True

Question 4

Combined financial statements (as distinguished from consolidated statements) would be appropriate when:

Answer 4

Common control: One individual (not a corporation) owns a controlling interest in two or more businesses that have related operations;
Common management: Two or more businesses are under common management;
Unconsolidated subsidiaries: A parent lacks effective control over two or more subsidiaries (unconsolidated subsidiaries) for which it wishes to show summary results.