ABSTRACT
The definition of reporting boundaries represents a critical aspect for conceptualising the theory of the firm. It sets the logic of what is included (and excluded) from reporting in reflecting the performance and viability of the reporting entity's business model that standard setters and frameworks attempt to standardise. The chapter reviews the main theories and pronouncements that underlie the regulation of company and group financial reporting. It presents the views put forth by the key standard setters, namely the International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) on consolidation and on the principal technical and measurement implications that derive from them. Compared to IASB, the evolution of the FAS0042 rules for consolidating financial statements appears less scattered. Both the IASB and FASB have somehow reached a consensus both in terms of technical and measurement aspects, as well as of theories that underpin approaches, which can be seen as been mainly embodied by the entity view.
