You are a manger in the accounting department of Greene company.  Greene is a rapidly expanding manufacturing company, and is considering some additional acquisitions. The company would like to diversify, and is trying to decide between the two different scenarios outlined in Part 1 and Part 3.  To help him make his decision, the Chief Financial Officer would like specific information on how the potential acquisitions would affect financial reporting.

Part 1 – Greene is considering diversifying by purchasing an insurance company and a lumber company.  The CFO would like to know how the accounts of these two substantially different subsidiaries would be reported in the consolidated financial statements.  Research the Accounting Standards Codification to see what guidance is provided, and prepare a 2-page memo to the CFO with your findings.  Include in your memo at least two examples of situations in which it may be inappropriate to combine similar-appearing accounts of two subsidiaries.

Part 2 – View the attached excel file to prepare a consolidated balance sheet for Greene.

Part 3 -In a separate scenario, Greene is investigating purchasing two overseas manufacturing companies that would be included in Greene’s consolidated financial statements as wholly-owned subsidiaries.  One company is located in New Zealand, and the other company is located in Spain.  The CFO would like to know what factors need to be considered when determining the functional currency for a consolidated subsidiary.  Research the Accounting Standards Codification to see what guidance is provided, and prepare a 2-page memo to the CFO explaining the various economic indicators to be considered both individually and collectively.