Answer the following questions:

1. The Lazy Company has a December year-end and consolidates its wholly owned subsidiary, which has, as a matter of convenience a November year-end. Lazy Company has reported using US GAAP and is converting to IFRS next year.

Will Lazy Company be able to continue using a different year-end for its subsidiary under IFRS? Explain your answer.

2. Atom Manufacturing (AM) lends money to one of its independent distributors, which is in financial difficulty. The distributor is in a deficit position and the bank is insisting on a cash infusion that will be subordinated to its loan. AM wants to make sure this distributor is viable because it sells a lot of AM’s product. AM is considering asking for voting stock of the distributor to help securitize its loan.

Will IS likely need to consolidate this distributor under US GAAP and/or IFRS? Explain your answer.