Week 2 topic 2 review minimum of 150 words apa format

Marisol

I remember reading about this subject when writing my two page memo for the writing project. It stated that intercompany transactions must be eliminated before merging the parent company’s financial statements and the subsidiary company or companies. This step needs to be done before consolidating all the financial statements. A company cannot make a loan or buy it’s own company so therefore this adjustments need to be eliminated. Going back to the first question, if one company recorded the appropriate transactions and the other one didn’t then the data and numbers provided would be inaccurate and investors would be given the wrong data. If this were to be an ongoing issue then the ethical concerns would be worrisome. Managers in charge of the financial statements would need to be held responsible for any negative impact relating to the wrong information.