How to account for acquisitions?

Acquisitions: The company is also considering acquiring another small company. Communicate the crucial elements of creating consolidated financial statements including the income statement, balance sheet, and statement of cash flows in the case of possibly acquiring another company.
A. If the company acquires another small company, assess how it would know if it has to consolidate its financial statements on an annual basis. Defend your response.
B. Describe what the consolidation process entails.
C. Compose a hypothetical example of the consolidation worksheet and elimination entries. Ensure all information is entered accurately.
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