CHAPTER10
Consolidation
One of the key activities performed by the finance department is to prepare consolidated financial statements when a company controls one or more other legal entities. Consolidated financial statements are prepared as per accounting requirements (US GAAP, Local GAAP, or IFRS), and the process to prepare the statement for legal reporting of the parent company is called consolidation. Determining when to consolidate one entity to another is a complex area of accounting, but generally, if an entity is exposed or has rights to variable return on the investment made on another entity and has the power to control those returns, then the consolidation process should take effect. It is also important to investors because when ...
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