An Acquisition in Which a Parent (P)acquires Shares in a Subsidiary

question 11

Multiple Choice

An acquisition in which a parent (P) acquires shares in a subsidiary (S1) after that subsidiary (S1) has acquired shares in its subsidiary (S2) is referred to as a/an:

• A)passive acquisition
• B)active acquisition
• C)non- sequential acquisition
• D)sequential acquisition

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Definitions:

Net Operating Income

The profit realized from a business's operations after subtracting operating expenses but before taxes and interest.

Variable Selling

Refers to the costs associated with selling a product or service that fluctuate with the level of sales activity, such as commissions and shipping charges.

Absorption Costing

A cost accounting methodology that absorbs all production costs, like direct materials, direct labor, and overhead expenses whether variable or fixed, into the final cost of a product.

Variable Costing

A costing method that includes only the variable manufacturing costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.