Why Is It Advantageous for Firms to Organize Themselves as a Set

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The Answer is Many firms organize themselves as a set of separate legal entities to limit its total legal liability or to take advantage of corporate tax regulations.Multinationals are often required by the countries in which they do business to set up a separate company.Thus,the typical multinational comprises a parent company and a number of subsidiary companies located in different countries,most of which are wholly owned by the parent.However,although the subsidiaries may be separate legal entities,they are not separate economic entities.The purpose of consolidated financial statements is to provide accounting information about a group of companies that recognize their economic interdependence.

Why Is It Advantageous for Firms to Organize Themselves as a Set

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