The Eliminations and Adjustment Entries Necessary to Consolidate the Parent

question 25

Multiple Choice

The eliminations and adjustment entries necessary to consolidate the parent and subsidiary financial statements are translated as follows:

• A)​all balances, profits, and losses at the current exchange rate on the consolidation date
• B)​intercompany balances translate at the rates used for other accounts, profits and losses may be translated at an average rate
• C)​intercompany balances translate at the current rates, profits and losses translate at an average rate
• D)​none of the above are correct

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Definitions:

Voting Common Stock

Shares in a company that grant the holder the right to vote on corporate matters, such as electing the board of directors.

Fair Value

The market price for divesting an asset or the obligation to liquidate a liability in a harmonious transaction among interchange participants at the established evaluation period.

Book Value

Book value is the value of an asset as it appears on a balance sheet, calculated as the cost of the asset minus any depreciation.

Acquisition Method

The accounting technique used in consolidating the financial statements of a group where one entity has control over another.