When a Parent Sells Its Interest in a Subsidiary,any Profit

question 21

Multiple Choice

When a parent sells its interest in a subsidiary,any profit or loss generated by the subsidiary:

• A) is transferred to the parent's investment in subsidiary account, and used to calculate the amount of profit or loss on the sale of the shares.
• B) is immediately transferred to the equity section of the consolidated accounts, and is then available from distribution to shareholders.
• C) is set off against any remaining balance in the goodwill on acquisition account, with any remaining amount distributed as dividends to the new owners.
• D) is to be recorded in the consolidated financial statements for the period of the year that the parent had control of the subsidiary.

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Definitions:

Coefficient

In algebraic expressions, a variable is multiplied by a numerical or constant figure placed before it, acting as a multiplier.

Constant

A value that does not change and remains the same in mathematical equations, experiments, and various scientific contexts.

Regression

A statistical technique employed to identify the intensity and nature of the connection between a single dependent variable and one or more independent variables.

Scatterplot

A graphical representation that displays the relationship between two quantitative variables by using dots.