With the new entity approach, consolidation of assets and liabilities occurs only to the extent of the stock acquired by the parent.

Question

Quizplus · Accepted Answer

In the new entity approach, consolidation of assets and liabilities occurs as if the two companies (parent and subsidiary) have combined into a new entity, meaning all assets and liabilities are consolidated 100%, not just to the extent of the stock acquired by the parent.

With the New Entity Approach, Consolidation of Assets and Liabilities