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:

Slip-And-Fall

Refers to personal injury claims arising when an individual slips, trips, or falls as a result of a dangerous or neglected condition on someone else's property.

Illusory Promise

A statement that appears to be a promise but does not actually commit the person making it to any action or performance.

Accord

An agreement in law, specifically one that settles a dispute between parties by mutual consent.

Satisfaction

The fulfillment or gratification of a desire, need, or appetite.