When a Company Applies the Initial Method in Accounting for Its

question 60

Multiple Choice

When a company applies the initial method in accounting for its investment in a subsidiary and the subsidiary reports income in excess of dividends paid, what entry would be made for a consolidation worksheet?
A. Retained earnings
Investment in subsidiary

B. Investment in subsidiary
Retained earnings

C. Investment in subsidiary
Equity in subsidiary's income

D. Equity in subsidiary's income
Investment in subsidiary

E. Additional paid-in capital
Retained earnings

• A)A above
• B)B above
• C)C above
• D)D above
• E)E above

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Definitions:

Femoral Area

The region surrounding the femur or thigh bone, inclusive of the hip and upper thigh areas in the human body.

Tympanic Percussion

A method used in physical examinations to produce sounds by tapping on the body's surface, particularly over the tympanic area to assess air presence in body cavities.

Palpable Spleen

A spleen that is detectable upon physical examination, often indicating enlargement due to various health conditions.

Gastric Acid Secretion

The process of producing stomach acid, which aids in digestion and protects against pathogens in the gastrointestinal tract.