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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Definitions:

George Ritzer

A sociologist known for his work on consumerism, globalization, and the concept of McDonaldization, which describes the process of rationalization in societal institutions.

McDonaldization

The process by which the principles of the fast food industry, such as efficiency, predictability, and control, have come to dominate other sectors of American society and the world.

George Ritzer

An American sociologist known for his concepts of McDonaldization, which explains how principles of the fast food industry dominate more sectors of society and global culture.

Organic Free-range

Food products derived from animals that have been raised in natural conditions, with access to the outdoors, and without the use of synthetic pesticides or fertilizers.