Question

Which of the following is true? When companies employ push-down accounting:A) the subsidiary revalues assets and liabilities to their fair values as of the acquisition date.B) a special account called Revaluation Capital will appear in the consolidated balance sheet.C) all consolidation entries are made on the books of the subsidiary rather than in consolidated worksheets.D) the subsidiary is not substantially wholly owned by the parent.

Answer 1

Answer: The correct answer is A) The subsidiary revalues assets and liabilities to their fair values as of the acquisition date.

Explanation: Push down accounting is used when a company buys another company. This type of accounting revalues the assets and liabilities of the acquired company at a fair value on the date of acquisition.