A Parent Owns 100% of a Subsidiary Company

question 41

Multiple Choice

A parent owns 100% of a subsidiary company. One month before its year-end date of March 31, 2031, the parent loaned the subsidiary $120,000. The subsidiary paid back $20,000 in January 2014. In the preparation of the consolidated balance sheet for March 31, 2014, What amount of this loan should be eliminated in the consolidated financial statements?

• A)$0
• B)$20,000
• C)$ 100,000
• D)$120,000

Comprehend the process and financial statement impacts of declaring dividends, including the declaration and payment dates.

Assess the strategic reasons behind issuing stock dividends and the potential impacts on company valuation and shareholder equity.

Understand the concept of autonomous consumption and its relationship to total consumption.

Gain knowledge about historical savings rates, particularly within the United States.

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Definitions:

Mexican Exports

Goods or services sold by Mexico to other countries, which contributes to the country's economy and trade balance.

US Imports

Goods and services brought into the United States from other countries for sale or use.

Financial Market Panic

A widespread and abrupt drop in investor confidence that leads to a sharp sell-off in stock, bond, or other financial markets.

US Depositors

Refers to individuals or entities that deposit money in banks or financial institutions within the United States.