The full effects of transactions between entities within a group are eliminated on consolidation, regardless of the existence of an NCI.

Question

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When preparing consolidated financial statements, all transactions between entities within the group are eliminated regardless of the existence of a non-controlling interest (NCI). This is a fundamental principle of consolidation accounting, as the aim is to present the financial position and performance of the group as a single economic entity. Elimination of intra-group transactions ensures that only transactions with external parties are recorded in the consolidated financial statements, providing a more accurate and transparent view of the group's financial performance.

The Full Effects of Transactions Between Entities Within a Group