Problem:
Under traditional accounting methodology, historical cost is the accounting evaluation tool. However, when consolidations are implemented, the fair market value is used. Please consider the following questions:
Required:
Question 1: Why is it important that consolidations prescribe to fair value?
Question 2: When is the adjustment made?
Question 3: How often is the adjustment recalculated?
Question 4: How are the adjustments kept?
Note: Please show how to work it out.