In preparing consolidated financial statements,intercompany receivables and payables are never eliminated because they represent amounts due to or receivable from parties outside the consolidated entity.

Question

Quizplus · Accepted Answer

Intercompany receivables and payables are eliminated in the process of preparing consolidated financial statements because they represent amounts owed to or owed by entities within the consolidated group, not parties outside the group. Eliminating these intercompany balances ensures that the financial statements reflect the transactions and balances of the consolidated entity as a whole, rather than the entities within it individually.

In Preparing Consolidated Financial Statements,intercompany Receivables and Payables Are Never