A Parent Company Uses the Equity Method to Record Its

question 33

Multiple Choice

A parent company uses the equity method to record its investment in its subsidiary. To check the balance of the consolidated retained earnings, what amount should be added to the parent company's separate-entity retained earnings?

• A)Balance of the equity in the earnings of the subsidiary account
• B)Net income from the subsidiary company's separate-entity statement of income
• C)Balance of the investment account
• D)Increase in the balance of the investment account

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Definitions:

Liquid Market

A market with a high level of trading activity, where assets can be bought or sold quickly without causing a significant change in their price.

Investment Banks

Financial institutions that assist individuals, corporations, and governments in raising capital by underwriting and acting as the agent in the issuance of securities.

Commercial Banks

Financial institutions that provide loans, accept deposits, and offer basic financial products like savings accounts to the public.

Financial Matters

Issues or activities related to the management, investment, and control of money and assets.