What Values Should Be Used for the Assets, Liabilities, and Shareholders

question 53

Multiple Choice

What values should be used for the assets, liabilities, and shareholders' equity to start the consolidation process?

• A)Carrying values for the parent company and fair values for the subsidiary company.
• B)Fair values for the parent company and carrying values for the subsidiary company.
• C)Carrying values for both the parent and the subsidiary companies.
• D)Fair values for both the parent and the subsidiary companies.

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Definitions:

Purchase Assets

The act of acquiring property, equipment, or other valuable items that are expected to generate revenue or appreciate in value over time.

Mutual Fund

An investment program funded by shareholders that trades in diversified holdings and is professionally managed.

C Corporations

A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity.

Unlimited Life

Refers to corporations or legal entities that continue to exist indefinitely until dissolution, unlike natural persons who have a finite lifespan.