Consolidation adjustments that are made to prepare consolidated financial statements of the parent and subsidiary are required to avoid double counting.

Question

Quizplus · Accepted Answer

Consolidated financial statements include the financial information of both the parent and subsidiary companies. Without adjustments to eliminate double counting, the financial statements could overstate the assets, liabilities, and equity of the consolidated group. Therefore, consolidation adjustments are required to ensure accurate and reliable financial information.

Consolidation Adjustments That Are Made to Prepare Consolidated Financial Statements