Intragroup Profits Are Eliminated in Consolidation to Reduce Consolidated Profits

question 51

True/False

Intragroup profits are eliminated in consolidation to reduce consolidated profits.

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Definitions:

Direct NCI

Direct non-controlling interest (NCI) refers to the portion of equity in a subsidiary not held directly by the parent company, giving those external shareholders a proportional share of the entity's net assets and profits.

Economic Entity

An organizational unit for which it is possible to separate financial information and which conducts economic activities independently.

Consolidated Financial Statements

The financial statements of a group in which the assets, liabilities, equity, income, expenses, and cash flows of the parent and its subsidiaries are presented as those of a single economic entity.

Ownership Interest

The right or claim an individual or entity has on assets, often evidenced by equity or shares in a company.