5 disadvantages of consolidated financial statements

5 disadvantages of consolidated financial statements.

Consolidated financial statements are the “Financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent (company) and its subsidiaries are presented as those of a single economic entity”.

The following are shortcomings of consolidated financial statements:

Unprofitable companies are set off against

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Conditions set by IFRS 10 to determine entities required to prepare consolidated financial statements

IFRS 10 requires that any entity that is the parent (control other entities) must prepare consolidated financial statements. An entity is a parent if it controls another entity.

Control exists when an investor is exposed, or has rights to variable returns from its involvement with the investee and has the ability to affect those returns through its power over … Read the rest