DIY Ltd Owns 20 Subsidiary Companies

question 22

Multiple Choice

DIY Ltd. owns 20 subsidiary companies. Most of the subsidiaries are hardware stores operating in rural areas. One of the subsidiaries has been having financial difficulties and has finally decided to cease operations. Which of the following statements about DIY's consolidated financial statements is true?

• A)DIY should report this as a discontinued operation.
• B)DIY should report any losses from this as part of its normal operating activities.
• C)Whether DIY treats this as a discontinued operation depends on if it used the cost method or the equity method to record the subsidiary.
• D)DIY is not required to disclose anything about this closure.

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Definitions:

Work Process

A work process is a series of actions or steps taken in order to achieve a particular end in the context of professional or organizational tasks.

Asynchronous Communication

Communication that does not require participants to be concurrently engaged, allowing responses at individual convenience.

Best-fitting Regression Line

A line through a scatter plot of data points that best expresses the relationship between those points, typically found using least squares regression.

Slope

The slope is a measure of the steepness or incline of a line, defined as the ratio of the change in the y-value over the change in the x-value between two points on the line.