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 impacts 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 options listed.
E) Nothing needs to be done.

Question

Quizplus · Accepted Answer

If group members do not apply the same accounting methods, adjustments must be made on consolidation to remove the impacts of the different policies. This ensures that the consolidated financial statements reflect a true and fair view of the group's financial position and performance. Changing accounting policies across the group or presenting two sets of consolidated accounts are not practical solutions. A choice is not needed between different options as the appropriate course of action is to adjust the financial statements to remove the effects of inconsistent accounting policies. Therefore, option B is the best choice.

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