A Parent Company Can Record Its Investment in a Subsidiary

question 31

Multiple Choice

A parent company can record its investment in a subsidiary using either the cost or the equity method. Which account will appear on the financial statements under the equity method, but not under the cost method?

• A)Investment in subsidiary
• B)Unamortized fair value adjustments
• C)Equity earnings of subsidiary
• D)Goodwill

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Definitions:

Profit And Loss

A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period of time, typically a fiscal quarter or year, to show the company's financial performance.

Making Decisions

The process of selecting a course of action from several alternatives to achieve a specific objective.

Management Accounting Responses

The actions or strategies that management accounting suggests or implements in response to financial analyses or business challenges.

E-Commerce

The exchange of goods and services, or the transfer of money or information, across an electronic network, mainly the internet.