Consolidated financial statements are typically prepared when one company has a controlling interest in another unless:
A) The subsidiary is a finance company
B) The fiscal year-ends of the companies are more than three months apart.
C) Circumstance prevent the exercise of control
D) The two company are in unrelated industries, such as real estate and manufacturing.

Question

Quizplus · Accepted Answer

Consolidated financial statements are prepared when one company has a controlling interest in another, regardless of industry differences or fiscal year-end timing. The exception is when circumstances prevent the exercise of control, such as legal restrictions or severe long-term restrictions on fund transfers between the parent and subsidiary.

Consolidated Financial Statements Are Typically Prepared When One Company Has