Z Company acquired a subsidiary several years ago that was appropriately excluded from consolidation last year. This year Z has consolidated the subsidiary in its financial statements. This results in:
A) An accounting change that should be reported prospectively.
B) A correction of an error.
C) An accounting change that should be reported by restating the financial statements of all prior periods presented.
D) Neither an accounting change nor a correction of an error.

Question

Quizplus · Accepted Answer

This is a change in reporting entity to be accounted for retrospectively. That is, financial statements of prior periods are restated to report the financial information for the new reporting entity in all periods.

Z Company Acquired a Subsidiary Several Years Ago That Was