Hardford Corp

question 49

Multiple Choice

Hardford Corp. held 80% of Inglestone Inc., which, in turn, owned 80% of Jade Co. Excess amortization expense was not required by any of these acquisitions. Separate net income figures (without investment income) as well as upstream intra-entity gross profits (before deferral) included in the income for the current year follow:

-Which of the following statements is true regarding a subsidiary's investment in the parent company's stock?

• A) The treasury stock approach focuses on the parent's control over its subsidiary.
• B) For consolidation, both the parent and subsidiary must defer gross profit on remaining inventory from intra-entity transfers.
• C) In consolidation, the parent's retained earnings will not be reduced by the dividends it paid to the subsidiary.
• D) This corporate combination is known as mutual ownership.
• E) All of these answer choices are true statements.

Understand the concept of the agency problem and ways to mitigate it.

Identify the various financial institutions and markets in Canada.

Comprehend the differences between types of business structures and their taxation.

Understand the implications and mechanisms of management compensation strategies in alignment with shareholder interests.