At a recent staff meeting, the vice president of marketing appeared confused. the controller had assured him that the parent company and each of the subsidiary companies had properly accounted for all transactions during the year. after several other questions, he finally asked, "if it has been done properly, then why must you spend so much time and make so many changes to the amounts reported by the individual companies when you prepare the consolidated financial statements each month? you should be able to just add the reported balances together." required: prepare an appropriate response to the controller answer the marketing vice president's question.

The accountant might be having issues with consolidating the reports of the individual subsidiary.

Explanation:

Below are appropriate responses:

(1) The accounting policies, principles adopted by each subsidiary might be different, hence this could lead to discrepancies and readjustments of the report by the controller.

(2) In order to ensure fair presentation and accuracy of financial information of the subsidiaries, the controller, might need to look over the financial statements.

(3) If the subsidiaries are foreign subsidiaries, the controller would need to translate the financial information, using the functional currency.

(4) Where, they are intra-group transactions (goods in transit, cash in transit, intra group sales and transfers), the controller would need to make adjustments of those transactions .

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