Prime Company has been expanding rapidly and is now an extremely diversified company for its size. It currently owns three companies with manufacturing facilities, two companies primarily in retail sales, a consumer finance company, and two natural gas pipeline companies. This has led to some conflict between the company’s chief accountant and its treasurer. The treasurer advocates presenting no more than five assets and three liabilities on its balance sheet. The chief accountant has resisted combining balances from substantially different subsidiaries and has asked for your assistance.
Research the Accounting Standards Codification to see what guidance is provided and prepare a memo to the chief accountant with your findings. Include citations to and quotations from the most relevant references. Include in your memo at least two examples of situations in which it may be inappropriate to combine similar-appearing accounts of two subsidiaries.