A Parent Company Uses the Partial Equity Method to Account

question 31

Multiple Choice

A parent company uses the partial equity method to account for an investment in common stock of its subsidiary.A portion of the dividends received this year were in excess of the parent company's share of the subsidiary's earnings subsequent to the date of the investment.The amount of dividend income that should be reported in the parent company's separate income statement should be

• A)zero.
• B)the total amount of dividends received this year.
• C)the portion of the dividends received this year that were in excess of the parent's share of subsidiary's earnings subsequent to the date of investment.
• D)the portion of the dividends received this year that were NOT in excess of the parent's share of subsidiary's earnings subsequent to the date of investment.

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Definitions:

Restatement (Third) of Torts

A legal publication by the American Law Institute providing a comprehensive overview of the modern American law of torts.

Restatement (Second)

A collection of model legal rules and principles that aims to simplify and clarify the law, often referring specifically to American law.

Products Liability

The area of law in which manufacturers, distributors, suppliers, retailers, and others who make products available to the public are held responsible for the injuries those products cause.

Express Warranty

An explicit guarantee by a seller to a buyer that a product or service meets certain quality and performance standards.