Which of the Following Statements Is False in Regards to the Consolidation

question 101

Multiple Choice

Which of the following statements is false in regards to the consolidation of financial statements?

• A)GAAP and IFRS have different consolidation requirements.
• B)Under GAAP,completion of consolidated financial statements occurs when a parent company has control over another company.
• C)Under GAAP,a parent company may own less than 50% of the voting shares of another company yet still qualify to consolidate financial statements.
• D)Under GAAP,consolidation is generally restricted to situations where a parent company has control of over 20% of the voting shares of another company.
• E)Under GAAP,there are circumstances when a parent company owns a majority of the voting stock of another company but does not prepare consolidated financial statements.

---

Definitions:

IFRS

A global set of accounting standards formulated by the International Accounting Standards Board (IASB), known as International Financial Reporting Standards.

Payroll Taxes

Charges levied on both employers and employees, typically determined based on a percentage of what employers pay to their workers as wages.

Federal Income

Income subject to federal income tax, which includes earnings from various sources such as wages, interest, dividends, and capital gains, among others.