Which of the following should appear in consolidated financial statements?
A)All intercompany transactions properly recorded on each affiliate's books.
B)Transactions between the consolidated company and outside parties.
C)Transactions not accounted for by the simple equity method.
D)Lease transactions between a parent and subsidiary.

Question

Which of the following should appear in consolidated financial statements?
A)​All intercompany transactions properly recorded on each affiliate's books.
B)​Transactions between the consolidated company and outside parties.
C)​Transactions not accounted for by the simple equity method.
D)​Lease transactions between a parent and subsidiary.

Quizplus · Accepted Answer

Transactions between the consolidated company and outside parties should appear in consolidated financial statements. This is because consolidated financial statements are intended to present the financial position and results of operations of a parent and its subsidiaries as if the group were a single entity. Transactions with outside parties reflect the group's dealings with external entities, which are relevant for stakeholders. Intercompany transactions (A and D) are eliminated in consolidation to avoid double counting, and the equity method (C) is a separate accounting technique for investments not consolidated.

Which of the Following Should Appear in Consolidated Financial Statements