When a parent-subsidiary relationship exists, consolidated financial statements are prepared in recognition of the accounting concept of Economic Entity.
"The economic entity principle states that the recorded activities of a business entity should be kept separate from the recorded activities of its owner(s) and any other business entities. This means that you must maintain separate accounting records and bank accounts for each entity."
Parent-subsidiary relationship means “a relationship that exists when one corporation directly or indirectly owns shares possessing more than 50 percent of the voting power of another corporation.”
Hence the answer is Economic Entity
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