In Reporting Consolidated Earnings Per Share When There Is a Wholly

question 108

Multiple Choice

In reporting consolidated earnings per share when there is a wholly owned subsidiary, which of the following statements is true?

• A) Parent company earnings per share equals consolidated earnings per share when the equity method is used.
• B) Parent company earnings per share is equal to consolidated earnings per share when the initial value method is used.
• C) Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value exceeds book value.
• D) Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value is less than book value.
• E) Preferred dividends are not deducted from net income for consolidated earnings per share.

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Definitions:

General Ledger

A full catalog of all economic activities a company has engaged in from its inception, systematically arranged by accounts.

Cash Account

An account that records all cash transactions, including receipts and payments, reflecting the company's liquidity status.

Permanent Accounts

Balance sheet accounts whose balances are carried over into the next accounting period.

Balance Sheet

A financial statement that shows an entity's assets, liabilities, and shareholders' equity as of a specific date, providing a snapshot of its financial condition.