CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

At what point in the process should the parent company adjust the foreign subsidiary's accounts to bring them in accordance with GAAP?

A. Prior to the beginning of the Translation process.
B. After Translation, but prior to consolidation.
C. After consolidation, but prior to reporting.
D. No adjustments are necessary, since most foreign countries already use GAAP.
E. No adjustment should be necessary. Foreign subsidiaries are required by the SEC to have an accounting system that is consistent with GAAP.
Correct Answer: A

User Contributed Comments 4

User Comment
mimi01 I do not understand this
pjdeschenes I think the idea is the foreign sub should have a set of GAAP-adjusted books. These have to be generated prior to translation.
arudkov if u use IFRS -
first - convert 2 US GAAP in functional currency.
second - convert converted GAAP statements 2 presentation currency.
vinaysood Adjustment means to bring in accordance with US GAAP. Hence, it has to be done prior to beginning of Translation.
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