Sun Company owns 75% of Moon Inc., how would Sun's financial statements be prepared?
A)On a consolidated basis.
B)On a specific purpose basis.
C)On a subsidiary basis.
D)On a financial basis.

Question

Quizplus · Accepted Answer

When one company owns a significant portion (more than 50%) of another company, the financial statements are typically prepared on a consolidated basis. This means that the financial information from both companies is combined to present a comprehensive view of the overall financial position and performance of the group. In this case, Sun Company owns 75% of Moon Inc., so consolidating the financial statements would present a more accurate picture of the group's financial situation.

Sun Company Owns 75% of Moon Inc