Before undertaking the consolidation process, it may be necessary to make the following adjustments in relation to the individual statements if the parent and the subsidiary do not use the same accounting policies for like transactions in similar circumstances: Group of answer choicesthe parent will prepare its own financial statements using the same accounting policies as the subsidiary.all of the options are incorrect.the subsidiary will prepare its own financial statements using accounting policies that are negotiated with the parent.the subsidiary will prepare its own financial statements using the same accounting policies as the parent.

Which of following statements is not correct in relation to the consolidation process?Group of answer choicesTo avoid double counting of the group's equity, the equity of the subsidiary at the acquisition date needs to be eliminated from the records of the subsidiary.Subsequent to the acquisition date, any intragroup transactions within the group needs to be adjusted and eliminated.The fair value adjustments of assets that were not previously recorded by the subsidiary are recognised in the business combination valuation entries.Consolidated financial statements should offset the carrying amount of the parent's investment in the subsidiary.

Which of the following statements is incorrect?Group of answer choicesWhere consolidated financial statements are prepared over a number of years, consolidation entries need to be made every time a consolidation worksheet is prepared.Consolidation adjusting entries affect the ledger accounts of the parent and subsidiaries.A consolidation worksheet is used to help the process of adding together the financial statements of the parent and its subsidiaries.There are no consolidated ledger accounts.

Combined financial statements provide financial information aboutGroup of answer choicesThe parent and its subsidiariesThe subsidiariesTwo or more entities without a parent-subsidiary relationshipThe parent PreviousNext

A parent and its subsidiary adopt different bases for measuring property plant and equipment assets. Upon consolidation, the financial statements must reflect: a. The accounting policy of the group. b. The accounting policy of the subsidiary. c. The accounting policy of the company that generates more revenue. d. None of the above.

Example:Parent Company A owns 100% of Subsidiary Company B.Consolidated Statement of Financial Position:Combine assets and liabilities of both companies.Eliminate any receivables and payables between Company A and Company B.Consolidated Statement of Comprehensive Income:Combine revenue and expenses of both companies.Eliminate any sales from Company A to Company B and related cost of sales.