“The consolidation process is time consuming and repetitive. Companies should not have to present consolidated financial...

“The consolidation process is time consuming and repetitive. Companies should not have to present consolidated financial statements as users can look at individual entities’ financial statements for their decision making.” Comment.

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Expert Solution

Consolidated financial statements are made collectively by aggregating a parent company and its subsidiary company's financials.

GAAP and IFRS both include provisions that help a company to create the framework for consolidated financial statement reporting.

Consolidated financial statements are used by the companies to take the tax benefits, for example if one of the subsidiary company having losses then it can be set off in the consolidated financial statements, the use of debt either by parent or subsidiary company also facilitates the tax benefits from the company's point of view.

Yes, it is true that the consolidation process is repetitive and time consuming but as it has the tax benefits that is why company choose to consolidated financial statement reporting.

Users can look at individual entities' financial statements for their decision making but as it is explained above consolidated financial statements give the tax benefits to the company therefore, they choose the consolidation process even knowing the fact that it is time consuming.

ekkarill92 answered 1 year ago

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