In Reporting Consolidated Earnings Per Share When There Is a Wholly

question 108

Multiple Choice

In reporting consolidated earnings per share when there is a wholly owned subsidiary, which of the following statements is true?

• A) Parent company earnings per share equals consolidated earnings per share when the equity method is used.
• B) Parent company earnings per share is equal to consolidated earnings per share when the initial value method is used.
• C) Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value exceeds book value.
• D) Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value is less than book value.
• E) Preferred dividends are not deducted from net income for consolidated earnings per share.

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Definitions:

Casting

A manufacturing process where a liquid material is poured into a mold and solidifies to take on a specific shape.

Finishing

is the process of completing the final stages of manufacturing to prepare products for sale, such as painting, polishing, or packaging.

Direct Labor-Hours

The total number of work hours spent by employees who are directly involved in the manufacturing process.

Traditional Costing

An accounting method that allocates overhead costs to products based on a predetermined rate, often labor or machine hours.