On the Date of Acquisition, Consolidated Retained Earnings and Consolidated

question 57

Multiple Choice

On the date of acquisition, consolidated retained earnings and consolidated ordinary shares in shareholders' equity is equal to:

• A) the sum of the parent and subsidiary's shareholders' equity.
• B) the sum of the parent's shareholders' equity plus its pro rata share of the subsidiary's shareholders' equity.
• C) the parent's shareholders' equity.
• D) the subsidiary's shareholders' equity.

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Definitions:

Operating Income

EBIT, which stands for Earnings Before Interest and Taxes, indicates a firm's profit derived specifically from its primary business activities.

Investment Turnover

A measure of a company's efficiency in using its assets to generate sales revenue; calculated as sales divided by the investment in assets.

Return on Investments

A metric for assessing how effectively an investment generates returns in comparison to its expense.

Controllable Revenues

Revenues over which a manager or department has influence or direct control, often used in performance evaluation and budgeting.