When group members do not apply the same accounting methods,the consolidation process requires which of the following to be done?
A) All group members must change their accounting policies to be consistent.
B) Adjustments must be made on consolidation to remove the effects of the different policies.
C) Two sets of consolidated accounts need to be presented; the first done on the basis of the inconsistent policies, the second done after the subsidiaries have adjusted their policies in line with the parent.
D) A choice is to be made by the parent's management between any of the three other given answers.

Question

Quizplus · Accepted Answer

Adjustments must be made on consolidation to remove the effects of the different policies. All group members do not need to change their accounting policies, and presenting two sets of consolidated accounts can cause confusion and may not be necessary. The parent's management can make the appropriate adjustments during consolidation to ensure consistency in accounting methods.

When Group Members Do Not Apply the Same Accounting Methods,the