Question

Sweden Ltd. acquired Tanzania Group by purchasing all of Tanzania’s stock. Sweden has a June 30 fiscal year end and Tanzania has a December 31 year end. Can Sweden consolidate Tanzania’s statements as prepared at its fiscal year end? Explain.

Answer 1

The financial statements of the parent and its subsidiaries used in the preparation of the consolidated financial statements shall have the same reporting date. When the end of the reporting period of the parent is different from that of a subsidiary, the subsidiary prepares, for consolidation purposes, additional financial information as of the same date as the financial statements of the parent to enable the parent to consolidate the financial information of the
subsidiary, unless it is impracticable to do so.

If the difference of year ends is 03 months or less, you can use the subsidiary accounts with adjustments for the material transactions and event during the period of difference.if it is impracticable to do so, the parent shall consolidate the financial information of the subsidiary using the most recent financial statements of the subsidiary adjusted for the effects of significant transactions or events that occur between the date of those financial statements and the date of the consolidated financial statements. In any case, the difference between the date of the subsidiary’s financial statements and that of the consolidated financial statements shall be no more than three months, and the length of the reporting periods and any difference between the dates of the financial statements shall be the same from period to period.

Here, The final option is that the Tanzania will have to prepare interim financial statements to coincide with the Sweden's year end.

Best route would be to formally change year end of subsidiary to match the parent's year end.