Q2.

Without consolidated statements, it is often very difficult for an investor to gain an understanding of the total resources controlled by a company. A consolidated balance sheet provides a much better picture of both the total assets under the control of the parent company and the financing used in providing those resources. Similarly, the consolidated income statement provides a better picture of the total revenue generated and the costs incurred in generating the revenue. Estimates of future profit potential and the ability to meet anticipated funds flows often can be more easily assessed by analyzing the consolidated statements. Consolidated financial statements are required by GAAP in certain circumstances. This information can be very useful to stockholders and creditors. Yet, there are some limitations to these financial statements for which the users must be aware. Refer to some of the consolidated financial statements of companies and discuss what are the limitations that can you think of consolidated financial statements?