CFAS Chapter 27 Problem 1

1. When consolidating the financial statements of a parent and its subsidiary, which of the
following is eliminated? Investment in subsidiary
2. A British parent entity uses the revaluation model to measure its property, but a philippine
subsidiary uses the cost model. The Philippine subsidiary’s directors find the revaluation
model too costly to implement. In the consolidated financial statements, is the group
allowed to measure the philippine subsidiary’s property under the cost model? No, the
Philippines subsidiary’s property shall be adjusted to conform to the group’s accounting
policy of revaluation model.