For the purposes of consolidated financial statements, a group consists of:
A) an investor and its investees.
B) a parent entity and all its subsidiaries.
C) an entity that is controlled by a parent.
D) an entity that has one or more subsidiaries.

Question

Quizplus · Accepted Answer

A group for consolidated financial statements includes a parent entity and all its subsidiaries. This is because a parent entity has control over its subsidiaries and should consolidate their financial statements to provide a clearer picture of the group's financial position and performance. Option A is incorrect because it only involves an investor and its investees, which may not have control over the investees. Option C is incorrect because it only involves an entity that is controlled by a parent, and it does not include any subsidiaries that the parent may also control. Option D is incorrect because it only involves an entity with one or more subsidiaries, but it does not necessarily include a parent entity that controls those subsidiaries.

For the Purposes of Consolidated Financial Statements, a Group Consists