Control of a Subsidiary Was Achieved with the Initial Investment

question 37

Multiple Choice

Control of a subsidiary was achieved with the initial investment in subsidiary stock.When a subsequent block of subsidiary's stock is purchased

• A)​the parent must change from the cost method to the equity method.
• B)​the parent must change from the equity method to the cost method.
• C)​no change in accounting methods is required.
• D)​none of the above.

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Definitions:

Repairs

Expenditures to restore property or equipment to its previous operating condition without materially adding to its value.

Primarily Rental

This refers to income or property that is mainly used for rental purposes, often generating rental income for the owner.

Primarily Personal

Describes expenses or activities mainly for individual or non-business purposes.

Personal/Rental

Pertaining to property that is used for personal purposes at times and rented out at others, often affecting tax implications.