CAF-4 · Chapter 25 · Question 16 of 19
Holding Company (HC) acquired Subsidiary Company (SC). HC's financial year ends on 31 December, while SC's ends on 30 June. What must SC do regarding its financial year?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It must ensure its financial year coincides with HC (i.e., change to 31 December), unless valid reasons exist against it.
Explanation
To facilitate consolidated financial statements, the board of a subsidiary company must ensure its financial year coincides with that of the holding company, barring valid contrary reasons.
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