Consolidated financial statements combine the separate financial statements of the purchasing company and the acquired company into a single set of financial statements.

Question

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Consolidated financial statements are prepared to provide a comprehensive view of the financial performance and position of a group of companies as a single entity. The separate financial statements of the parent company and its subsidiaries are combined, eliminating any intercompany transactions or balances to avoid double counting of assets, liabilities, revenues, and expenses. The resulting consolidated financial statements give users a better understanding of the overall financial health and prospects of the group.

Consolidated Financial Statements Combine the Separate Financial Statements of the Purchasing