Essay about Financial Statements Of A Company
Due to some directors’ lack of understanding on consolidated financial reports, as the chief accountant for Woolly Ltd, I am here to present a report in order to demonstrate the purpose of preparing consolidated financial reports and why it is significant to have these consolidated reports to users. In general, consolidated financial reports are the combined financial statements of a parent company and its subsidiaries. Since Woolly Ltd is the parent company of Jumper Ltd, these two entities are supposed to be regarded as one single entity. Thus, a separate financial statement seems necessary for the entity and its shareholders.
As the definition in AASB 10, the consolidated financial reports are ‘the financial statements of a group in which the assets, liabilities, equity, income, expenses and cash flows of the parent and its subsidiaries are presented as those of a single economic entity’. Moreover, the consolidated financial reports are made up of the consolidated income statement, the consolidated balance sheet, the consolidated case flow statement and the consolidated statement of changes in equity. Besides, in the consolidated financial reports, the individual accounts of the parent and subsidiaries are not affect.
In general, the goal of the consolidated financial statements is to present simple and overview reports, which indicated the financial activities and position of the whole entity. To make it more specific, there…