How does U.S.GAAP differ from IFRS with respect to presenting consolidated financial statements?
A)U.S.GAAP requires all controlled subsidiaries to be consolidated, whereas IFRS allows for optional consolidated financial statements.
B)IFRS excludes subsidiaries acquired for disposal within one year from the consolidation requirement, whereas U.S.GAAP requires all controlled subsidiaries to be consolidated.
C)U.S.GAAP allows a company to exclude subsidiaries it is holding for sale from the consolidation process.
D)IFRS requires the parent company to own 50% of the voting shares of the subsidiary before consolidation is allowed.

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Quizplus · Accepted Answer

Under IFRS, subsidiaries acquired for disposal within one year do not have to be consolidated. However, U.S. GAAP requires all controlled subsidiaries to be consolidated. This means that U.S. GAAP does not provide an option for companies to not consolidate subsidiaries. Additionally, U.S. GAAP allows a company to exclude subsidiaries it is holding for sale from the consolidation process, which is not allowed under IFRS. Finally, IFRS requires the parent company to have both control and significant influence over the subsidiary before consolidation is required, but there is not a specified percentage threshold as in option D.

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