Mallard Ltd

question 22

Multiple Choice

Mallard Ltd. acquired 75% of the outstanding common shares of Teal Ltd. at December 31, 20X1, for $900,000. Mallard has recorded its investment using the cost method.
- In 2008, Teal paid out dividends of $100,000. In preparing Mallard's consolidated financial statements, what elimination is required for the dividends?

• A)Reduce dividends declared by $75,000; reduce dividend income by $75,000.
• B)Reduce dividends declared by $100,000; reduce dividend income by $100,000.
• C)Reduce dividends declared by $100,000; reduce dividend income by $75,000; reduce non-controlling interest by $25,000.
• D)Reduce dividend declared by $100,000; reduce dividend income by $75,000; increase non-controlling interest by $25,000.

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Definitions:

President's Pleasure

A legal term denoting the indefinite detention of a prisoner because the head of state has not exercised their power to limit the period of detention.

Federal Reserve Act

Legislation passed in 1913 that established the Federal Reserve System as the central bank of the United States, intended to provide the country with a safe, flexible, and stable monetary and financial system.

Central Bank

The primary monetary authority of a country, responsible for regulating the financial system, issuing currency, and controlling inflation and interest rates.

Lender of Last Resort

An institution, usually a central bank, that offers loans to banks or financial institutions that are struggling financially or are considered highly illiquid.