A Parent Company Records an Investment in Its Subsidiary Using

question 14

Multiple Choice

A parent company records an investment in its subsidiary using the equity method. Which of the following statements about consolidated net income is true?

• A)Consolidated net income is higher than the net income under the equity method.
• B)Consolidated net income is lower than the net income under the equity method.
• C)Consolidated net income is higher than the net income under the equity method only if the subsidiary is profitable and has not paid any dividends.
• D)Consolidated net income is the same as the net income under the equity method.

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Definitions:

Gonorrhea

A sexually transmitted infection caused by the Neisseria gonorrhoeae bacterium.

Heterosexual

Attraction to and sexual relations between individuals of the opposite sex.

Gamete

A mature haploid male or female germ cell that is able to unite with another of the opposite sex in sexual reproduction to form a zygote.

Condom

A contraceptive device usually made of latex or polyurethane, worn on the penis or inserted into the vagina to prevent pregnancy and reduce the risk of sexually transmitted infections.