Chapter_6_hw - CHAPTER 6 CONSOLIDATED FINANCIAL STATEMENTS...

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CHAPTER 6 CONSOLIDATED FINANCIAL STATEMENTS: ON DATE OF BUSINESS COMBINATION ANSWERS TO REVIEW QUESTIONS 1. Consolidated financial statements for a parent company and its subsidiaries are similar to combined financial statements for home office and branches of a single legal entity in that both types of financial statements include the total revenue, expenses, assets, and liabilities of the constituent segments after all intracompany and intercompany transactions, profits or gains, and balances have been eliminated. The two types of financial statements are dissimilar because the separate legal entity status of a parent company and its subsidiaries necessitates more complex financial statement items, such as minority interest in net assets of subsidiary. 3. No, a consolidated income statement is not required for the year ended on the date of a business combination. A purchase represents a fresh start for accounting purposes; thus, only a consolidated balance sheet is appropriate on the date of a business combination. SOLUTIONS TO EXERCISES
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Chapter_6_hw - CHAPTER 6 CONSOLIDATED FINANCIAL STATEMENTS...

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