A Parent Company That Owns 90% of the Shares of a Subsidiary

question 52

Multiple Choice

A parent company that owns 90% of the shares of a subsidiary must present its interest in the subsidiary using which of the following?

• A)A consolidation of 90% of the assets and liabilities of the subsidiary.
• B)A full consolidation with a 10% non-controlling interest reported in the consolidated statements.
• C)The equity method assuming 90% ownership.
• D)The equity method using 100% ownership with an offsetting liability for the 10% non-controlling interest.

Understand the concepts of standard costing, including standard quantities, rates, and cost variance analysis.

Calculate and interpret variances in direct materials, direct labor, and manufacturing overhead.

Analyze the impact of actual production activities against standard cost benchmarks.

Understand the purpose and calculation of labour rate and efficiency variances.

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Definitions:

Fairly-Priced Securities

Securities that are believed to be priced appropriately according to their risk level and the expected rate of return.

Positive Betas

A term referring to financial securities that have a beta greater than zero, indicating that their returns generally move in the same direction as the market.

Zero Alphas

Situations in which an investment performs exactly as expected according to its beta, showing neither added nor diminished value.

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, often represented by government bonds.