Question

What is the need for preparation of consolidated balance sheet?

Answer 1

Consolidated balance sheets must be prepared according to the same rules and accounting methods used across the parent company and its subsidiaries. Generally accepted accounting principles, sometimes known as GAAP, must be adhered to at all times. The purpose of consolidated financial statements is to present, primarily for the benefit of the owners and creditors of the parent, the results of operations and the financial position of a parent and all its subsidiaries as if the consolidated group were a single economic entity.

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