Push-down accounting
A)requires a subsidiary to use the same accounting principles as its parent company.
B)is required when the parent company uses the equity method to account for its investment in a subsidiary.
C)is required when the parent company uses the cost method to account for its investment in a subsidiary.
D)is the process of recording the effects of the purchase price assignment directly on the books of the subsidiary.

Question

Quizplus · Accepted Answer

Push-down accounting is the process of recording the effects of the purchase price assignment directly on the books of the subsidiary. It is also known as "pushing down" the parent company's accounting policies to the subsidiary level, effectively requiring the subsidiary to use the same accounting principles as its parent company. Push-down accounting is required when there is a change in control and the acquiring company uses the acquisition method to account for the investment in the subsidiary. It is not related to the equity or cost method of accounting for investments.

Push-Down Accounting