When a Parent Uses the Initial Value Method Throughout the Year

question 85

Multiple Choice

When a parent uses the initial value method throughout the year to account for its 80% investment in an acquired subsidiary, which of the following statements is true at the date immediately preceding the date on which adjustments are made on the consolidated worksheet?

• A) Parent company net income equals consolidated net income.
• B) Parent company retained earnings equals consolidated retained earnings.
• C) Parent company total assets equals consolidated total assets.
• D) Parent company dividends equal consolidated dividends.
• E) Goodwill is recorded on the parent's books.

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Definitions:

Orchitis

Inflammation of one or both testicles, often caused by infections or viruses such as the mumps virus.

Scrotal Swelling

An abnormal enlargement of the scrotal sac, which may indicate various conditions, such as hydrocele, epididymitis, or inguinal hernia.

Testis

The male reproductive gland that produces sperm and testosterone, found in the scrotum.

Inguinal Ring

An anatomical structure in the groin area through which the spermatic cord (in men) and the round ligament of the uterus (in women) pass.