When a Parent Uses the Initial Value Method Throughout the Year

question 24

Multiple Choice

When a parent uses the initial value method throughout the year to account for its investment in an acquired subsidiary, which of the following statements is true before making adjustments 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 needs to be recognized on the parent's books.

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Definitions:

Long Term

The long term refers to an extended period of time, often relating to strategic planning, investments, and outcomes that are expected to unfold or mature over several years.

Aggressive Direct Selling

A highly assertive sales strategy where products or services are sold directly to consumers in a manner that energetically pushes for immediate sales.

Opportunity Costs

The cost of forgoing the next best alternative when a decision is made to pursue a particular action.