The Parent Company Concept Adjusts Subsidiary Net Asset Values for The

question 5

Multiple Choice

The parent company concept adjusts subsidiary net asset values for the:

• A) differences between cost and fair value.
• B) differences between cost and book value.
• C) total fair value implied by the price paid by the parent.
• D) total cost implied by the price paid by the parent.

Recognize how firms make decisions on output supply and production methods.

Understand the role of market price of output, input prices, and technology in determining production decisions.

Know the difference between long run and short run in economic terms.

Understand the goal of firms to maximize total revenue.

---

Definitions:

Weighted-Average Method

A costing method that averages the costs of goods available for sale during the period for the calculation of cost of goods sold and ending inventory.

Processing Department

A specific unit within a manufacturing facility where a distinct phase of production is carried out, like assembly or packaging.

Cost Per Unit

This refers to the total expense incurred to produce, store, and sell one unit of a product or service.

Materials

The raw items or components used in the production of goods.