Which of the Following Statements Is True Regarding the Subsidiary's

question 58

Multiple Choice

Which of the following statements is true regarding the subsidiary's investment in its parent's common stock?

• A) All of the parent company's common stock is eliminated.
• B) The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to treasury stock.
• C) The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to retained earnings.
• D) The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to additional paid-in capital.
• E) The investment in parent company's common stock is not eliminated in consolidation.

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Definitions:

IRR

Internal Rate of Return; a metric in finance that helps in calculating the expected profitability of prospective investments.

Cash Flow

The total amount of money being transferred into and out of a business, affecting the company's liquidity.

Project

A project is a temporary endeavor designed to produce a unique product, service, or result, typically with defined goals and constraints.

Mutually Exclusive

Situations or choices where the selection of one option precludes the selection of another, often used in decision-making processes.