Change in reporting entity

A change in reporting entity occurs when two or more previously separate entities are combined into one entity for reporting purposes, or when there is a change in the mix of entities being reported. When this combination occurs, the resulting entity must restate any prior financial statements that it is including in its reporting package for comparison purposes. By doing so, users of the financial statements can more accurately assess current performance against historical results. The reason for the change in reporting entity must be included in the disclosures that accompany the financial statements.

Related Courses

Business Combinations and Consolidations