Which of the following is true? When companies employ push-down accounting:
A)the subsidiary revalues assets and liabilities to their fair values as of the acquisition date.
B)a special account called Revaluation Capital will appear in the consolidated balance sheet.
C)all consolidation elimination entries are made on the books of the subsidiary rather than in consolidated worksheets.
D)the subsidiary is not substantially wholly owned by the parent.

Question

Quizplus · Accepted Answer

When companies employ push-down accounting, the subsidiary revalues assets and liabilities to their fair values as of the acquisition date. This is done to reflect the new ownership structure and to facilitate a better understanding of the subsidiary's financial position. Push-down accounting is typically used when a subsidiary is acquired by an external company or when there is a change in ownership of a subsidiary.

Which of the Following Is True? When Companies Employ Push-Down