A Parent Company Reduced Its Ownership in Its Subsidiary from 80

question 3

Multiple Choice

A parent company reduced its ownership in its subsidiary from 80% to 15%. How should this be reported on the parent's consolidated financial statements?

• A)As a disposal of its interest in the subsidiary and a reacquisition of the retained interest at fair value
• B)As a disposal of its interest in the subsidiary and a reacquisition of the retained interest at book value
• C)As a write-down to the retained interest
• D)As an adjustment to the shareholders' equity

Comprehend the advantages and disadvantages of leasing from the lessee's viewpoint.

Understand lessor accounting and the difference between sales-type and operating leases.

Grasp the concept and implications of executory costs in lease agreements.

Calculate lease amortization and understand the role of residual values.

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Definitions:

Productive Language

The aspect of language involving the production of words and sentences to express thoughts, as opposed to understanding language (receptive language).

Comprehend Speech

The process by which the brain interprets and understands spoken language.

Receptive Language

The ability to understand words and language, including listening and reading comprehension.

Sign Language

A form of communication using visual gestures and signs, primarily used by the deaf and hard-of-hearing.