It Is Common for a Parent Firm to Record Its

question 13

Essay

It is common for a parent firm to record its investment in a subsidiary under either the cost or simple equity method to expedite the elimination process. This does create some complications, however, when all or a portion of the investment is sold. Assume that in each of the following cases, the parent sells its investment midway through its fiscal year.
(1)The parent owned an 80% interest and sold all of its holdings.
(2)The parent owned an 80% interest and sold a 20% interest to reduce its ownership percentage to 60%.
(3)The parent owned an 80% interest and sold a 60% interest to reduce its ownership percentage to 20%.
Required:
a.For each of the above cases, comment on the procedures necessary to record the sale, where the investment is carried under simple equity, and the impact on consolidated income of the sale.
b.For each of the above cases, state the added procedures that would be necessary if the investment was recorded under the cost method.

Identify the effects of specific medications on symptoms of disorders like schizophrenia, generalized anxiety disorder, and bipolar disorder.

Understand the benefits of atypical antipsychotic medications in treating both positive and negative symptoms of schizophrenia.

Recognize the use of antidepressants in treating disorders beyond depression, such as bipolar disorder.

Understand the significance of patient compliance and the challenges associated with psychoactive medication regimens.

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Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a specific point in time, showing its assets, liabilities, and shareholders' equity.

Common Stock Split

A corporate action to divide its existing shares into multiple shares to boost the liquidity of the shares, though the market capitalization remains the same.

Stockholders' Equity

Stockholders' Equity is the residual interest in the assets of a corporation that remains after deducting its liabilities, representing ownership interest in a company.

Net Income

The total earnings or profit of a company after deducting all expenses, taxes, and losses from the total revenue.