F3

Question 1

Consolidated Financial statement is prepared when a company has a controlling interest in another unless:

Answer 1

when the subsidiary is in legal reorganization or bankruptcy, or under severe foreign exchange restriction.there is a serious doubt on the parent company ability to control subsidiary.

Question 2

when parent-subsidiary relationship exists, consolidated financial stmt are prepared in recognization of the accounting concept of:

Answer 2

the economic entity can be identified with a unit of accountability.

Question 3

what is the concept of consolidated financial statement?

Answer 3

consolidated financial stmt ignored legal issue but economic substance. It is economic truth but a legal fiction.