Z Company Acquired a Subsidiary Several Years Ago That Was

question 58

Multiple Choice

Z Company acquired a subsidiary several years ago that was appropriately excluded from consolidation last year. This year Z has consolidated the subsidiary in its financial statements. This results in:

• A) An accounting change that should be reported prospectively.
• B) A correction of an error.
• C) An accounting change that should be reported by restating the financial statements of all prior periods presented.
• D) Neither an accounting change nor a correction of an error.

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Definitions:

Demand Curve

A graph showing the relationship between the quantity of a good that consumers are willing and able to purchase and the price of the good.

Marginal Cost

The hike in cost incurred by generating an additional unit of a good or service.

Profit-Maximizing

This is the process by which a firm decides on the price and output level that returns the maximum profit.

Short-Run Monopoly

A situation where one company dominates the market for a certain product or service temporarily, often before new entrants arrive.