Part 2 requirements XXXXXXXXXXwords maximum): The financial statements for the year ending 30 June 2019 for the economic entity have been prepared on the basis of your journals from Part 1. These...

Part (a)
The entity selected by me is BHP Group Limited since it has a number of subsidiaries not just in Australia but spread across different parts of the world (BHP, 2020) . The company has recorded all consolidation adjustments which are required to be incorporated by it in its books of accounts for giving effect to intra-group balances and to eliminate the effect of intra-group transactions (BHP, 2020).
As per the revised AASB 10, Consolidated Financial Statements, an entity must prepare consolidated financial statements and make the required disclosures in its financial statements of a particular accounting period which are prescribed by Accounting Standard 10 for those entities which control one or more than one other entities (AASB, 2018a). The Accounting Standard 10 also provides the accounting treatment and adjustment entries that must be recorded by the parent entity as well as the subsidiary(s) in order to give effect to consolidation adjustments in the books of accounts of both the entities. The accounting requirements have been provided in Para 19 of the Australian Accounting Standard 10 which says that the parent company must apply uniform accounting policies for similar transactions while preparing its consolidated financial statements (AASB, 2018a).
The main advantage of preparing and recording consolidation adjustment entries is that it enables the parent company and its subsidiary(s) to offset the loans and advances given to/taken from each other. Apart from this the assets, liabilities, reserves and surplus of the parent company an all its subsidiaries are clubbed together which makes it possible for the shareholders, potential investors, creditors, lenders etc. to view the complete picture of the financial position and profitability of the company(EDUCBA, n.d.). They are able to see the financial information about the company as a whole instead of the parent company or subsidiary(s) alone. In the absence of consolidation adjustment entries, the group would not be able to prepare its consolidated financial statements and the shareholders, prospective investors and all other interested parties would have to refer the financial statements of parent company and subsidiary (s) separately which will cause a lot of inconvenience and extra time will be involved in interpreting those financial statements (PWC,...