Eliminating entries are made to cancel the effects of intercompany transactions and are made on the:
A) books of the parent company.
B) books of the subsidiary company.
C) workpaper only.
D) books of both the parent company and the subsidiary.

Question

Quizplus · Accepted Answer

Eliminating entries are made on the consolidation workpaper only, not on the individual books of the parent or subsidiary companies. These entries are used to remove the effects of intercompany transactions to prepare consolidated financial statements.

Eliminating Entries Are Made to Cancel the Effects of Intercompany