Consolidated financial statements should be prepared only when a subsidiary company has a controlling interest in the parent company.

Controlling Interest

Ownership of more than 50% of the common stock of another entity.

Consolidated Financial Statements

Financial statements that present the assets and liabilities controlled by the parent company and the total revenues and expenses of the subsidiary companies.

Subsidiary Company

A company that is entirely or majority-owned by another company, referred to as the parent company.