Change in Reporting Entity | CFA Level 1 Exam Prep

Change in Reporting Entity

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Question

Which of the following describes a change in reporting entity?

Answers

A. A company acquires a subsidiary that is to be accounted for as a purchase.

B. None of these answers.

C. A business combination is made using the pooling-of-interests method.

D. A manufacturing company expands its market from regional to nationwide.

E. A company acquires additional shares of an investee and changes from the equity method of accounting to consolidation of the subsidiary.

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Explanations

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A. B. C. D. E.

A change in reporting entity can occur in the following ways: initial publication of consolidated financial statements; change in consolidation policy regarding subsidiaries; and pooling of interests.

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