In preparing a consolidated financial report,the parent entity consolidates:
A) The financial statements of all entities over which it has the power to exercise control.
B) The financial statements of only those entities over which it has the power to control and in which it holds more than 50% of the voting shares.
C) The financial statements of only those entities in which it holds more than 50% of the ordinary share capital; as a result of which it necessarily has the power to exercise control.
D) None of the above.

Question

Quizplus · Accepted Answer

In preparing a consolidated financial report, the parent entity consolidates the financial statements of all entities over which it has the power to exercise control. This includes subsidiaries where the parent holds more than 50% of the voting shares, but also entities where the parent has the ability to control the financial and operating policies, such as joint arrangements or associates. Therefore, option A) is the most comprehensive and accurate answer.

In Preparing a Consolidated Financial Report,the Parent Entity Consolidates