BAO2203: Consolidated Financial Reporting The purpose of consolidated financial statements is to ‘present the financial affairs of a parent company: Corporate Accounting Assignment, VU, Malaysia

Required:

Based on above statements, you are required to answer following questions:

1. What are the benefits and issues associated with consolidated financial reporting? You must support your answer with published articles and journals.
2. According to an article published by Huefner and Largay III (1990), one of the issues regarding consolidated financial reporting is ‘consolidation policy: the circumstances under which subsidiaries should or should not be consolidated.’ (Huefner and Largay III, 1990, p. 28). Why do the authors think it is an issue? You must support your answer with published articles and journals.
3. When a parent company acquires majority ownership in existing companies, there is a question as to whether the ‘acquiring ownership in a subsidiary precipitates a new basis of accountability – a revaluation of the assets and liabilities – for the acquired company’ (Huefner and Largay III, 1990, p. 28). Why do the authors think revaluation of assets and liabilities in a business acquisition is an issue? You must support your answer with published articles and journals.
4. Consolidation policy is usually based on the notion of control. However, ‘even in the presence of majority ownership, it may be concluded that effective control does not exist, and hence that consolidation is inappropriate ((Huefner and Largay III, 1990, p. 29). Explain and discuss the concept of ‘control’ in relation to consolidated financial reporting? Can control exist without majority ownership? You must support your answer with published articles and journals.