Which of the following describes a change in reporting entity?
A) A company acquires a subsidiary that is to be accounted for as a purchase.
B) A manufacturing company expands its market from regional to nationwide.
C) A company divests itself of a European branch sales office.
D) Changing the companies included in combined financial statements.

Question

Quizplus · Accepted Answer

A change in reporting entity occurs when there is a change in the companies included in the financial statements. This is commonly seen in combined financial statements when a subsidiary or affiliate is added or removed. Choices A, B, and C describe other types of events that may require accounting adjustments but do not involve a change in reporting entity.

Which of the Following Describes a Change in Reporting Entity