The key criterion for the consolidation of the separate financial statements of entities is:
A) substance over form;
B) control;
C) the existence of contracts for the supply of goods between the entities;
D) capacity of the accounting systems to facilitate the necessary combination process;

Question

Quizplus · Accepted Answer

The key criterion for the consolidation of the separate financial statements of entities is control. This means that the company should have control over the finances of the other entity. Substance over form, while important, relates to the economic reality of transactions rather than consolidation criteria. The existence of contracts for the supply of goods between entities is not a sufficient criterion for consolidation. Accounting systems do facilitate the consolidation process but are not a criterion for consolidation in and of themselves.

The Key Criterion for the Consolidation of the Separate Financial