Which of the Following Statements Is False Regarding a Subsidiary's

question 85

Multiple Choice

Which of the following statements is false regarding a subsidiary's investment in the parent company's stock?

• A) The treasury stock approach focuses on the parent's control over its subsidiary.
• B) For consolidation, both the parent and subsidiary must defer gross profit on remaining inventory from intra-entity transfers.
• C) In consolidation, the parent's retained earnings will not be reduced by the dividends it paid to the subsidiary.
• D) This corporate combination is known as mutual ownership.
• E) Shares of the parent held by a subsidiary are treated as outstanding shares in consolidated financial statements.

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