Under the Direct Method, What Values Should Be Entered for the Assets

question 2

Multiple Choice

Under the direct method, what values should be entered for the assets, liabilities, and shareholders' equity to start the consolidation process?

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

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Definitions:

Normal Good

A normal good is a type of good for which demand increases when income increases and decreases when income decreases, assuming all other factors remain constant.

Inferior Good

A type of good for which demand decreases as the income of individuals increases, conversely, its demand increases when consumer income declines.

Inferior Good

A type of good for which demand decreases as the income of consumers increases, contrasting with normal goods.

Normal Good

A good for which demand increases when consumer income rises, and decreases when consumer income falls.