When a Company Owns More Than 50% of the Common

question 148

Multiple Choice

When a company owns more than 50% of the common stock of another company

• A) consolidated financial statements are usually prepared.
• B) the cost method of accounting is used.
• C) they are referred to as the subsidiary.
• D) they recognize revenue when dividends are received.

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Definitions:

Molding Department

A specialized section of a manufacturing company focused on producing parts by shaping materials in molds.

Weighted-Average Method

A costing method that averages all costs and applies them to output, typically used in process costing.

Conversion Cost

The aggregate cost of direct labor and manufacturing overhead associated with converting raw materials into finished goods.

Direct Materials

Raw materials that are directly incorporated into a finished product.