When a Subsidiary Purchases Shares of the Parent, on a Consolidated

question 22

Multiple Choice

When a subsidiary purchases shares of the parent, on a consolidated basis:

• A)​a determination and distribution schedule must be completed to determine if goodwill is present.
• B)​it is considered to be the parent's purchase of treasury stock.
• C)​an elimination entry must be made for the subsidiary's share of the parent's income.
• D)​None of the above is correct.

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Definitions:

Public Choice Analysis

A branch of economics that studies the decision-making processes of government bodies as well as the behavior of voters, politicians, and government officials.

James Buchanan

An American economist known for his work on public choice theory, which explains how political decision-making processes affect economic policies, and the recipient of the Nobel Memorial Prize in Economic Sciences in 1986.

Public Choice Analysis

A field of economics that studies how economic theory and methodologies apply to the public sector, analyzing government behavior and decision-making processes.

Logically Consistent Theory

A theory in which the statements and principles are coherently aligned and do not lead to any contradictions or inconsistencies.