When a Parent-Subsidiary Relationship Exists Between Two Companies

question 78

Multiple Choice

When a parent-subsidiary relationship exists between two companies:

• A) the parent company will keep one set of accounting records covering both companies
• B) the subsidiary company will keep one set of accounting records covering both companies
• C) the parent company must use the cost method to account for the subsidiary
• D) both the parent and the subsidiary will continue to keep their own separate accounting records as if the parent-subsidiary relationship does not exist

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Definitions:

Thinking

Transforming and manipulating information in memory. Individuals think in order to reason, reflect, evaluate ideas, solve problems, and make decisions.

Manipulating Information

The process of handling, organizing, and adapting data or knowledge to understand it better or to achieve a specific outcome.

Transforming Information

The process of changing information from one format or medium to another, often involving interpretation or reorganization.

Strategy Use

The application of planned methods or tactics aimed at achieving specific goals or overcoming obstacles.