(Learning Objective 3: Understanding consolidated fi nancial statements) Answer these questions about consolidation accounting:

1. Defi ne “parent company.” Defi ne “subsidiary company.”

2. How do consolidated fi nancial statements differ from the fi nancial statements of a single company?

3. Which company’s name appears on the consolidated fi nancial statements? How much of the subsidiary’s shares must the parent own before reporting consolidated statements?