Which of the Following Is Not True of the Consolidation

question 36

Multiple Choice

Which of the following is not true of the consolidation process for a stock acquisition?

• A)​Journal entries for the elimination process are made to the parent's or subsidiary's books.
• B)​The investment account balance on the parent's books will be eliminated.
• C)​The balance sheets of two companies are combined into a single balance sheet.
• D)​The shareholder equity accounts of the subsidiary are eliminated.

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Definitions:

Service Cost

The portion of the pension expense that is recognized for the increase in pension benefits related to employee services of the current period.

Unrecognized Prior Service Cost

Costs not immediately recognized on the income statement related to retroactive benefits granted to employees in a pension plan amendment.

Straight-Line Method

A depreciation method that allocates an equal amount of depreciation each year over the useful life of the asset.

Defined Benefit Pension Plan

A type of pension plan where an employer commits to pay a specified pension amount to the retiree, based on factors like salary history and duration of employment.