The key characteristic that determines when consolidated financial statements should be prepared is:
A) the existence of transactions between the entities.
B) control.
C) substance over form.
D) significant influence.

Question

Quizplus · Accepted Answer

The key characteristic that determines when consolidated financial statements should be prepared is control. If one entity has control over another entity, then the financial statements of both entities need to be consolidated to present a true and fair view of the group's financial position and performance. Transactions, substance over form, and significant influence are all factors that can determine the extent of consolidation adjustments, but they do not determine whether or not consolidated financial statements should be prepared in the first place.

The Key Characteristic That Determines When Consolidated Financial Statements Should