A parent and its subsidiary adopt different bases for measuring property plant and equipment assets.On consolidation the financial statements must reflect:
A) the accounting policy of the group
B) the accounting policy of the subsidiary
C) either the accounting policy of the parent or the subsidiary
D) none of the above

Question

Quizplus · Accepted Answer

When a parent and its subsidiary have different accounting policies for measuring property plant and equipment, the financial statements after consolidation should reflect the accounting policy of the group as a whole. The aim of consolidation is to present financial information for the entire economic entity, so the accounting policy of the group should prevail over the accounting policy of any individual member. Therefore, choice A is the best answer.

A Parent and Its Subsidiary Adopt Different Bases for Measuring