A Subsidiary That Is 75% Owned by Its Parent Company

question 2

Multiple Choice

A subsidiary that is 75% owned by its parent company pays a dividend of $100 000.On consolidation the amount to be eliminated is:

• A) $75 000.
• B) $100 000.
• C) $25 000.
• D) not eliminated.

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Definitions:

FOB Destination

A shipping term indicating that the seller bears the transport costs and retains ownership until the goods reach the buyer's location.

FOB Shipping Point

A term indicating that the buyer takes ownership and responsibility for goods at the point of departure from the seller's shipping dock.

Freight-Out

Refers to the cost associated with shipping goods to customers, a part of the selling expenses in accounting.

Periodic Inventory System

An inventory system that records inventory levels and the cost of goods sold at specific intervals, rather than continuously.