A Parent Company Can Record an Investment in Its Subsidiary

question 26

Multiple Choice

A parent company can record an investment in its subsidiary under either the cost or equity method.Which of the following statements about consolidated net income is true?

• A)Consolidated net income is higher if the parent company uses the equity method rather than the cost method.
• B)Consolidated net income is higher if the parent company uses the cost method rather than the equity method.
• C)Consolidated net income is higher if the parent company uses the equity method only if the subsidiary is profitable and has not paid any dividends.
• D)Consolidated net income is the same under both methods.

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Definitions:

Immigrants

People who have moved to a new country with the intention of settling there, often in search of better living conditions, employment, or safety.

Liberties

The absence of constrictive control by governing bodies on an individual’s lifestyle, behaviors, or political perspectives in a societal setting.

Anglicization

The process of adopting English culture, language, or norms, often in the context of colonized societies integrating with or being influenced by English settlers or governance.

Colonial Elites

Individuals or families of significant economic, social, and political influence during the colonial period, often landowners or officials.