Which of the Following Is True Concerning the Treasury Stock

question 61

Multiple Choice

Which of the following is true concerning the treasury stock approach in accounting for a subsidiary's investment in parent company stock?

• A) The original cost of the subsidiary's investment reduces long-term liabilities.
• B) The cost of parent shares is treated as if the shares are no longer outstanding.
• C) The subsidiary must apply the equity method in accounting for the investment if the treasury stock approach is used.
• D) The treasury stock approach increases total stockholders' equity.
• E) The cost of parent shares is treated as if the shares are no longer issued.

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Definitions:

Like Terms

Terms in an algebraic expression that have the same variables raised to the same power, which can be combined or simplified.

Operation Indicated

The process of performing the mathematical operation (such as addition, subtraction, multiplication, or division) as specified by the given problem.

Collect

To gather or accumulate items or amounts, typically for a specific purpose or collection.

Like Terms

In algebra, terms that have the same variable raised to the same power, which can be combined by addition or subtraction.