A Parent Can Acquire the Shares in a Subsidiary on a "Cum

question 16

Multiple Choice

A parent can acquire the shares in a subsidiary on a "cum div." or an "ex div." basis. If the shares are acquired on a cum div. basis:

• A)The parent is not entitled to the dividend declared at acquisition date.
• B)The parent acquires two assets - the investment in the subsidiary and the dividend receivable.
• C)The dividend payable recorded by the subsidiary is a liability of the group.
• D)Both the dividend receivable and the dividend payable are not eliminated on the consolidated statements.

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Definitions:

Base Amount

A fundamental quantity or value from which other calculations or analyses are derived.

Business Segment

A distinct part of a company that focuses on a specific product or market sector, often with its own performance measurement.

Debt to Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by stockholders' equity, indicating the proportion of equity and debt used to finance the company's assets.

Comparative Financial Statement

Financial statements that provide a comparison of a company's financial performance over multiple periods.