If a subsidiary's reporting date does not coincide with the parent entity's reporting date, adjustments must be made for the effects of significant transactions that occur between the two reporting dates provided the reporting dates differ by no more than:
A) nine months.
B) three months.
C) one month.
D) six months.

Question

Quizplus · Accepted Answer

If the subsidiary's reporting date is within three months of the parent entity's reporting date, adjustments must be made for significant transactions that occurred between the two reporting dates. This is in accordance with generally accepted accounting principles (GAAP) in the United States. Adjustments may also be necessary if the reporting dates differ by more than three months, but this is not specified in the question.

If a Subsidiary's Reporting Date Does Not Coincide with the Parent