When Valuing a Parent Company That Owns Less Than 100

question 14

True/False

When valuing a parent company that owns less than 100 percent of a subsidiary,the minority interest holder of the subsidiary has a claim on the company's assets.

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Definitions:

Direct Materials

are raw materials that can be directly attributed to the production process of a specific product, such as wood for furniture or metal for cars.

Break-even Points

The level of production or sales at which total revenues equal total expenses, resulting in no net profit or loss.

Common Fixed Expenses

These are fixed costs that do not vary with the volume of production or sales, such as utilities, rent, or administrative salaries, shared across different products or departments.

Variable Costing

An accounting method that considers only variable costs as product costs and treats fixed costs as period costs to be charged in full against the current period's revenue.