Consolidated Financial Statements

Companies use consolidated statements when there's a group of entities made up of a parent
company and its subsidiaries. They present the group as a single financial entity under the
parent's banner and are especially useful for conveying the position and total results of the
group as a whole.

Consolidated statements feature a specific legal entity, the parent, as the point of reference.
Companies most often use consolidated financials for SEC reporting and debt covenant
purposes.
A consolidated financial statement covers the activities of the parent company and its
subsidiaries in a single report,
For example, a healthcare group might have to prepare individual financial statements for
each hospital on a standalone basis, then combine those statements into a single report filing.
It's that combined statement that the group sends to the regulatory agency, or agencies, that
require it. Aside from healthcare, combined reporting is common in financial services and
insurance as well, amongst other industries. Companies also refer to “combined financials”
when they actually mean special purpose statements. Special purpose financial statements are
used to satisfy reporting requirements that consolidate entities
Non-Consolidated Financial statement

Non-consolidated financial statements are the separated financial statement of each individual
company. It is the same to consolidate financial statements, consist of the Income statement,
Statement of Financial Position, Statement of Cash Flow ad Statement of Change in Equity.
But it only includes one entity’s financial information.

Private company usually prepare non-consoliate financial statement due to its simple
structure. The private company has less requirement in preparing the financial statement
while the public company needs to comply with many regulations such as IFRS, SEC, and
other local guidelines.
Example of MCB (PDF FILE PAGE 195- 216)

Financial statements are like fine perfume; to be sniffed but not swallowed.
Abraham Briloff

Financial Statements are useful because they provide information which allows investors
and creditors to make better decisions. However, because of selective reporting of economic
events as well as non-comparable accounting methods and estimates, financial statements are
only an approximation of reality. In addition, because of the tendency to delay accounting
recognition, financial statements also tend to lag reality.
GAAP requires accrual basis accounting. In the accrual system, revenue is recognized
in the period when it is earned rather than when cash is collected, and expenses are
recognized when incurred rather than when paid. The cash basis accounting system
records revenue when cash is received and records expenses when cash is paid.
Smaller companies might use the cash basis since they do not have large account
receivables or account payables; however, cash basis is not in accordance with GAAP
standards.