Consolidated versus consolidating financial statements

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If the parent does not actively participate in the subsidiary’s operating, investing, and financing activities, the subsidiary is self-sustaining.

The subsidiary operates independently of the parent.

If you hold a minority interest in the subsidiary of a parent company, the consolidated financial statement won’t give you the information you need to make decisions about your holdings.

A subsidiary with minority shareholders must report its financial results separately from its parent company’s in addition to having its report included in the consolidated financial statements.

There are two methods for currency translation, the current-rate method and the temporal method.

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