When Preparing a Consolidation Worksheet for a Parent and Its

question 40

Multiple Choice

When preparing a consolidation worksheet for a parent and its foreign subsidiary accounted for under the equity method, which of the following statements is false?

• A) The cumulative translation adjustment included in the Investment in Subsidiary account is eliminated.
• B) The excess of fair value over book value since the date of acquisition is revalued for the change in exchange rate.
• C) The amount of equity income recognized by the parent in the current year is eliminated.
• D) The allocations of excess of fair value over book value at the date of acquisition are eliminated.
• E) The subsidiary's stockholders' equity accounts as of the beginning of the year are eliminated.

---

Definitions:

Banking System

The network of institutions, including commercial banks, central banks, and other financial intermediaries, that provide banking services and facilitate financial transactions within an economy.

U.S. Government Securities

Financial instruments issued by the United States Department of the Treasury to fund federal government spending, including Treasury bonds, notes, and bills.

Bank's Assets

refer to the resources owned by a bank, including loans, investments, cash, and other valuables.

Fed's Assets

The assets held by the Federal Reserve, including government securities, gold certificates, foreign exchange, and loans to banks.