The primary goal behind consolidating financial statements of a controlled subsidiary is
A)assuring that the subsidiary financial statements are the same under the temporal method or the current rate method.
B)assuring that the individual nature of the subsidiary entity is not lost in the consolidation.
C)representing the conversion of statements at the historical exchange rate.
D)representing the company's underlying economic condition.

Question

Quizplus · Accepted Answer

The primary goal of consolidating financial statements of a controlled subsidiary is to represent the company's underlying economic condition. Consolidated financial statements provide a comprehensive view of the financial position, financial performance, and cash flows of the entire group of companies, including the subsidiary. Thus, the consolidated financial statements reflect the financial results of the parent and its subsidiaries as if they were a single entity, which helps to determine the true economic condition of the company.

The Primary Goal Behind Consolidating Financial Statements of a Controlled