Where an Entity Prepares Consolidated Financial Statements, the Equity Method

question 57

Multiple Choice

Where an entity prepares consolidated financial statements, the equity method is applied to associates or joint ventures of the _________________________ in the consolidated financial statements, and not in the accounts of the ________ itself.

• A)parent; parent
• B)parent and its subsidiaries; subsidiary
• C)parent; subsidiary
• D)parent and its subsidiaries; parent.

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Definitions:

Charitable Contribution

A donation or gift to a qualified organization that is eligible for a tax deduction.

Adjusted Gross Income

An individual's total gross income minus specific deductions, used to determine taxable income on an income tax return.

FMV

Fair Market Value, which is the price that an asset would sell for on the open market between a willing buyer and a willing seller.

Basis

The amount invested in a property for tax purposes, typically the cost of the property which is used to figure gain or loss on sale.