Control of a Subsidiary Was Achieved with the Initial Investment

question 37

Multiple Choice

Control of a subsidiary was achieved with the initial investment in subsidiary stock.When a subsequent block of subsidiary's stock is purchased

• A)​the parent must change from the cost method to the equity method.
• B)​the parent must change from the equity method to the cost method.
• C)​no change in accounting methods is required.
• D)​none of the above.

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Definitions:

Left Hemisphere

The hemisphere of the brain that is typically associated with analytical thought, language, logic, and sequential processing.

Planning

The process of defining goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate activities.

Creative Functions

Roles or actions that generate innovative ideas or outcomes through imaginative or original thinking.

Risk Averse

A tendency to avoid risks or to minimize potential losses.