What Is the Effect If an Unconsolidated Subsidiary Is Accounted

question 2

Multiple Choice

What is the effect if an unconsolidated subsidiary is accounted for by the equity method but consolidated statements are being prepared for the parent company and other subsidiaries?

• A)​All of the unconsolidated subsidiary's accounts will be included individually in the consolidated statements.
• B)​The consolidated retained earnings will not reflect the earnings of the unconsolidated subsidiary.
• C)​The consolidated retained earnings will be the same as if the subsidiary had been included in the consolidation.
• D)​Dividend revenue from the unconsolidated subsidiary will be reflected in consolidated net income.

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Definitions:

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange traded funds (ETFs).

Financial Characteristics

Refers to attributes that describe the financial health, performance, and structure of a company, such as revenue, profitability, debt levels, and liquidity ratios.

Firm's Beta

A measurement of a company's stock market risk compared to the market as a whole; it quantifies the volatility or systemic risk of a firm's shares.

Industry Group

A classification of companies that conduct business activities in the same sector or segment of the economy.