In general, consolidated financial statements should be prepared
A) when a corporation owns more than 20% and less than 40% of the common stock of another company
B) when a corporation owns more than 50% of the common stock of another company
C) only when a corporation owns 100% of the common stock of another company
D) whenever the market value of the stock investment is significantly lower than its cost

Question

Quizplus · Accepted Answer

Consolidated financial statements should be prepared when a corporation owns more than 50% of the common stock of another company. This is because the ownership stake of more than 50% gives the controlling corporation the power to influence and control the financial and operating policies of the other company, making it necessary to consolidate their financial statements to give a more accurate representation of the consolidated entity's financial performance.

In General, Consolidated Financial Statements Should Be Prepared