Consolidated financial statements are typically prepared when one company has

Question

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Consolidated financial statements are prepared when one company has the controlling financial interest in another company. This means that the parent company has the power to control the financial and operating policies of the subsidiary, and therefore, is responsible for its overall financial performance. In this case, the parent company is required to combine the financial statements of the subsidiary with its own financial statements to present a consolidated view of the group's financial position and performance. Options A, B, and D may also be factors that contribute to the need for consolidated financial statements, but the controlling financial interest is the primary determining factor.

Consolidated Financial Statements Are Typically Prepared When One Company Has