Which method to use depends on how much it actually owns.
Generally accepted accounting principles requires a company to use consolidated accounting when it owns a controlling stake in another business.
Accounting rules generally define a controlling stake as between 20 percent and 50 percent of a company.
In consolidated accounting, the parent company essentially treats the subsidiary company as if it doesn't exist.
One of the most important resources of reliable and audited financial data is the annual report, which contains the firm's financial statements.
It’s the second in a two-part series by the F1 examiner.
In a technical sense, financial statements are a summation of the financial position of an entity at a given point in time.
Generally, financial statements are designed to meet the needs of many diverse users, particularly present and potential owners and creditors.
Consolidated financial statements were not examined at the equivalent level in the old syllabus.
They have now been included in F1 as an introduction to consolidated financial statements in preparation for the F2 exam.