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      Question

      Which of the following is a reason to prepare

      consolidated financial statements?
      A To present combined financial position of parent and subsidiaries as single economic entity where control exists Correct Answer Incorrect Answer
      B Only to comply with tax law Correct Answer Incorrect Answer
      C Only when both companies are listed Correct Answer Incorrect Answer
      D Only when parent has more than 90% shareholding Correct Answer Incorrect Answer

      Solution

      The primary objective of consolidation is to present the financial position and performance of a parent and its subsidiaries as if they were a single economic entity.

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