Consolidated Financial Statements

question 29

Multiple Choice

Consolidated financial statements:

• A) Show the results of operations, cash flows, and the financial position of all entities under a parent's control.
• B) Show the results of operations, cash flows, and the financial position of the parent only.
• C) Show the results of operations, cash flows, and the financial position of the subsidiary only.
• D) Include the investments account on the balance sheet.
• E) Do not include a balance sheet.

---

Definitions:

Equity Method

An accounting technique used for recording investments in associate companies, where the investment is initially recorded at cost and adjusted thereafter for the post-acquisition change in the investor's share of the investee's net assets.

Equipment Account

An account on the balance sheet that represents the current value of the equipment owned by a company after adjusting for depreciation and amortization.

Acquisition Method

An accounting approach used for consolidating the financial statements of a parent company and its subsidiaries to present as one entity.

Equity Method

Equity Method is an accounting technique used to record investments in other companies, where the investing company has significant influence but does not have full control or majority ownership.