Advantages Of Consolidated Financial Statements

Next, for general purpose financial reporting, the reason for the formation of consolidated financial statements are that they present the financial position and results for a parent and one or more subsidiaries as a single entity or corporation. Furthermore, a few benefits for the consolidation of financial statements are that for resource providers of the parent, creditors, and shareholders these financial statements tend to be more advantageous to them. In addition, when the combined entity that are under the control of the parent corporation generates a consolidating financial statement, the complete overview of those statements is often made clear and easy to understand. Also, consolidation financial statements give a proper balancing, a broad picture, necessity, exclusions, efficiency, and fraud prevention. Additionally, financial consolidated software is usually used to prepare consolidated financial reports thus it reduces paperwork, gives a simplified view, and there are continued updates. Although these statements are beneficial and useful, they have limitations. Hence. When data sets are aggregated across companies that have, to a large extent, different operating characteristics some …show more content…
Although there is an ease and understanding of the consolidated financial statements some individuals have found a way to manipulate and hide financial problems. As a result, the Financial Accounting Standards Board created some rules and regulations, along with definitions and requirements in order to produce a framework that would bring all authoritative accounting standards into a single source of GAAP, provide ongoing updates, facilitate with convergence to International Financial Reporting Standards (IFRS) and thus, lessen the risk of non-compliance with