week 7 Flashcards
Why consoildated financial statements are prepared
- To supply relevant info to investors of the parent entity
- Allow comparison with group to similar entities
- assist in discharge of accountability by group’s management
- report risks and benefits of group as single economic entity
Why consoildated financial statements are prepared
supply relevant info to investors of the parent company
- A shareholder’s wealth in the parent is dependent also on the performance of the other entities controlled by the parent
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Why consoildated financial statements are prepared
allow comparison of the group with similar entities
Some entities are organised into a group structure such that different activities are undertaken by separate entities within the group.
Other entities are organised differently, with some having all activities conducted within the one entity.
Access to consolidated financial statements makes comparisons across the group an easier task for the users of financial statements.
Why consoildated financial statements are prepared
To assist in the discharge of accountability by management of the group.
The consolidated financial statements report the assets under the control of the group management as well as the claims on those assets.
Why consoildated financial statements are prepared
To report the risks and benefits of the group as a single economic entity.
however, that the benefits from intragroup transactions are eliminated when preparing consolidated financial statements, as those statements should only reflect the effects of transactions with external parties.
