There Are Alternative Ways to Calculate Consolidated Retained Earnings

question 1

Multiple Choice

There are alternative ways to calculate consolidated retained earnings. One of the methods requires adjustments to be made to the parent company's separate-entity ending retained earnings balance as of the consolidation date. What adjustments must be made to determine ending consolidated retained earnings?

• A)Add in the dividends from the subsidiary to the parent and the parent's share of the subsidiary's adjusted income.
• B)Subtract the dividends from the subsidiary to the parent and the parent's share of the subsidiary's adjusted income.
• C)Add in the dividends from the subsidiary to the parent and subtract the parent's share of the subsidiary's adjusted income.
• D)Subtract the dividends from the subsidiary to the parent and add in the parent's share of the subsidiary's adjusted income.

---

Definitions:

Benefit

The advantage or profit gained from something.

Nash Equilibrium

A condition in strategic games, indicating that each participant's chosen strategy maximizes their payoff, given the strategies selected by others.

Payoff

The outcome of a decision or strategy, often quantified in terms of profit or loss.

Strategy

A plan of action designed to achieve a long-term or overall aim, often used in business, marketing, military, and game theory contexts.