Down Accounting

Down Accounting

 

Push-down accounting is a method of accounting in which the financial statements of a subsidiary are presented to reflect the costs incurred by the parent company in buying the subsidiary instead of the subsidiary’s historical costs. The purchase costs of the parent company are shown in the subsidiary’s statements.

Although the use of push-down accounting for external reporting is limited, this method has gained favor for internal reporting purposes. For this discussion, explain why push-down accounting has gained popularity for internal reporting purposes. Be sure to cite research evidence for this trend. It doesn’t have to be too long. Two paragraphs should be fine.

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