Which of the following consolidation concepts are described correctly?
A) The entity concept requires the inclusion of all the parent entity assets and the proportionate share of the assets and liabilities of the subsidiaries where the proportion is based on the direct ownership of the capital of the subsidiary by parent companies within the group.
B) The proprietary concept includes all the assets and liabilities of the parent company and subsidiaries as assets and liabilities of the group. Non-controlling interest is treated as a liability of the group.
C) The parent-entity concept includes all assets and liabilities of the parent and its subsidiaries in the consolidated accounts. The non-controlling interest is treated as a liability of the group.
D) The proprietary concept includes all the assets and liabilities of the parent company and subsidiaries as assets and liabilities of the group. Non-controlling interest is treated as a liability of the group; the parent-entity concept includes all assets and liabilities of the parent and its subsidiaries in the consolidated accounts. The non-controlling interest is treated as a liability of the group.

Question

Quizplus · Accepted Answer

The entity concept is correctly described, but it does not include the proportionate share of assets and liabilities based on direct ownership. The proprietary concept is also mentioned, but it is not a correct description as it treats non-controlling interest as a liability, whereas it is treated as equity. Option D includes both correct (parent-entity) and incorrect (proprietary) concepts together. Only option C correctly describes the parent-entity concept.

Which of the Following Consolidation Concepts Are Described Correctly