Consolidated financial statements are a GAAP requirement as it has some benefits. First, it provides a complete overview. They allow investors, business owners, financial analysts, and other interested parties to get a complete overview of the parent company. They can view how each subsidiary impacts the parent company. Second, the consolidated financial statements reduce the paperwork. If the parent company has nine subsidiaries, forty separate standalone financial reports have to be viewed. As a result, it will be very difficult to look over each one and try to get an overall view of the performance of the business. So, the consolidated financial statements cut this pile of reports down to four consolidated reports. Third, they give a simplified view of business performance. They cut out all transactions that occur between the parent company and its subsidiaries since, in the grand scheme of the business, these things cancel each other out. To summarize, consolidated financial statements make the process of evaluating the parent company and its subsidiaries easier and more …show more content…
First, the lease transfers the property′s ownership to the lessee. This criterion is not controversial and can be easily implemented. Second, the lease contains a bargain-purchase option that allows the lessee to purchase the leased property for a lower price than the property′s expected fair value at the date the option becomes exercisable. Third, the lease term is for the major part of the asset′s economic life. If this happens, the lessor transfers most of the risks and benefits of ownership to the lessee. So, capitalization is appropriate although determining the lease term and what constitutes the major part of the asset′s economic life may be trouble. Forth, the present value of the minimum lease payments amounts to substantially all of the fair value of the leased asset. If this happens, the lessee is effectively purchasing the