Assume That a Parent Company Has Four Subsidiaries

question 20

Multiple Choice

Assume that a parent company has four subsidiaries. Under IFRS 3, which of the following statements is true?

• A)All four subsidiaries must be reported using the parent-company extension method.
• B)All four subsidiaries must be reported using the entity method.
• C)Each subsidiary must be reported using either the parent-company extension method or the entity method. Consistency is not required.
• D)All four subsidiaries must be reported using either the parent-company extension method or the entity method. Consistency is required.

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Definitions:

Accounts Payable

Money owed by a company to its creditors for goods and services that have been delivered but not yet paid for.

Accounting Equation

A fundamental principle in accounting that states assets equal liabilities plus owner's equity.

Equipment

Physical assets used in the operation of a business, such as machinery, computers, and furniture.

Cash

Represents money or its equivalents (such as checks) that a company possesses and can use for transactions.