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Sometimes a parent acquires a subsidiary that does not have the same fiscal year end. Find...

Sometimes a parent acquires a subsidiary that does not have the same fiscal year end. Find the paragraphs in the international accounting standards that explain what should be done when the parent and subsidiary do not have the same year end.

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Answer #1

Always have a similar reporting date for the parent company and its subsidiaries. The maximum allowable difference between the end of your parent company’s reporting period and that of a subsidiary is three months, but it is still advisable to change and match a subsidiary’s reporting date with that of the parent company to enhance accuracy.

It is one of the first restructuring measures you should take when you acquire a subsidiary that has a different fiscal period. Alternatively, adjust the data in the subsidiary’s financial statements to align its financial results for the period with those of the parent company. This may involve preparing extra financial statements for the subsidiary, for purposes of complying with the parent company’s reporting date.

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