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Briefly explain the purpose of consolidated financial statements and discuss fully the rationale behind the requirement...

Briefly explain the purpose of consolidated financial statements and discuss fully the rationale behind the requirement for the Group to prepare a set of consolidated financial statements.

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Answer #2
  • External and internal users require to completely understand its group accounts.
  • Different set of accounts are used for different purposes, hence financial statements.
  • This is the rationale behind the requirement for the Group to prepare a set of consolidated financial statements.
  • The purpose of consolidated financial statements is to provide for the benefit of the owners and for the creditors of the parent, and other external parties, the result of the operation and the financial position of the parent and all its subsidiaries as if the consolidated group were a single entity.
  • Consolidated financial statements are also the requirement of a GAAP, therefore it is mandatory.
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