Intermediate accounting II Essay

The action by Coca-Cola Company and Marriott tidy sum to hold separate companies and transfer their debts to them is ge atomic number 18d towards posting a good gravel in their financial records. Owning less than 50% of the other keep company makes it an cerebrate company rather than a subsidiary. Consequently the Coca-Cola Company or Marriott Corporation world not include the associates accounts in their amalgamate accounts, thus the debts transferred to these associate companies will not affect the groups amalgamate accounts in a negative way.According to accounting practices the accounts of an associate company atomic number 18 not consolidated in the holding companys consolidated accounts. The enthronization made by the holding company is reflected in its accounts as an asset. The Coca-Cola Company and the Marriott Corporation would thus post a good billet in their financial records because the debt they transferred to the associate companies would not be reflected inst ead their investment in the associate companies is reflected thus further making their position neighborly.These actions are appropriate for the Coca-Cola Company and Marriott Corporation as posting a favorable position will enable them attract investors, loan financing and outgrowth their reputations. However, this treatment does not post a honest economical universe to the investors and customers. According to generally accepted accounting principles a company is supposed(a) to make full disclosure of all information relevant for a third party to make informed decision about the company as explained in Investor words.com website (http//www. investorwords. com/2108/full_disclosure. html) and in Gaap handbook of policies and procedures,1999 ( Siegel,Qureshi, 1998).The Generally pass judgment Accounting Principles should be amended so as the holding companies dejection be forced to reveal in their financial records, their share of liability held through the associate companie s. This will ensure that their records post an honest economic reality of their operations.