Simms Corp. controlled four domestic subsidiaries and one foreign subsidiary. Prior to the current year, Simms Corp. had excluded the foreign subsidiary from consolidation. During the current year, the foreign subsidiarywas included in the financial statements. How should this change in accounting entity be reflected in the financial statements?
Ch. 2: The Accounting Cycle Measuring Business Activities There are 2 main functions of accounting o Measure a business’s activities o Communicate those measurements to outside people The full set of procedures to achieve those functions is the accounting cycle External Transactions The activities that measure and communicate are classified into 2 categories o External o Internal Transactions the firm has with separate economic entities are external transactions o Sell products to customers o Buying supplies from vendors o Paying salaries to employees o Borrowing money from a bank Things that affect the financial position of the company but don’t
