The Parent Company Records the Receipt of Shares from a Subsidiary's

question 26

Multiple Choice

The parent company records the receipt of shares from a subsidiary's stock dividend as:

• A) dividend income.
• B) a reduction of the investment account.
• C) an increase in the investment account.
• D) none of these.

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Definitions:

Consolidated Financial Statements

Financial reports that aggregate all financial information of a parent company and its subsidiaries, showing the group's overall financial performance and position.

Parent's Share

The portion of equity interest in a subsidiary held by the parent company, reflecting its claim on the subsidiary's assets and income.

Unrealized Profits

Profits that have been recognized in the accounting records but have not yet been realized through the receipt or payment of cash or other assets.

Inventory

The total amount of goods and materials held by a company for the purpose of sale or production.