When a Parent-Subsidiary Relationship Exists Between Two Companies

question 45

Multiple Choice

When a parent-subsidiary relationship exists between two companies:

• A) the parent company must use the cost method to account for the subsidiary
• B) the parent company will keep one set of accounting records covering both companies
• C) the subsidiary company will keep one set of accounting records covering both companies
• D) both the parent and the subsidiary will continue to keep their own separate accounting records as if the parent-subsidiary relationship does not exist

---

Definitions:

Prima Facie Duty

Moral duty that is binding unless overridden by a more compelling moral duty.

Moral Requirement

An ethical obligation or duty that individuals are expected to follow based on moral principles or societal norms.

General Happiness

A state of overall well-being and contentment, often considered as a goal of human life.

Utilitarianism

A theory in normative ethics holding that the best moral action is the one that maximizes utility, usually defined as that which produces the greatest well-being of the greatest number of people.