Although the preparation of a consolidated balance sheet requires elimination entries,a consolidated income statement may always be prepared without any elimination entries.

Question

Quizplus · Accepted Answer

Consolidated income statement requires elimination entries to remove any intercompany transactions or profits that may have occurred between the parent company and its subsidiaries. Failure to eliminate these entries would result in overstating the revenue and expenses, thereby providing an incorrect picture of the consolidated net income.

Although the Preparation of a Consolidated Balance Sheet Requires Elimination