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Sir, Why is the below statement false?
The process of consolidation results in seperate legal entity.
The process of consolidation does not make entities a legal separate entity. Before entities are consolidated, individual entities are already regarded as a separate legal entities by registration. Consolidation will results in bringing the resources and results of a parent and subsidiaries as a single economic system.
JosephKayira: Please do not answer in this forum because it is Ask the Tutor Forum and you are not the tutor (but please do help people in the other Paper FA forum 🙂 ).
Sourav: JosephKayira is correct in the there is no new legal entity created. The parent company and the subsidiary company(s) are separate legal entity. Preparing consolidated accounts is simply to give more meaningful information to the shareholders of the parent company. I do stress this in my free lectures.
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