If a Parent Company Pays More Than Book Value for a 100

question 43

True/False

If a parent company pays more than book value for a 100 percent owned subsidiary,minority interest arises on the consolidated financial statements.

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Definitions:

Junk Bond

A high-risk, high-yield bond issued by companies considered to be at greater risk of defaulting on their debt obligations.

Corporate Bond

A debt security issued by a corporation to raise funding, offering periodic interest payments and the return of the principal at maturity.

Default

The failure to meet the legal obligations of a loan, such as not making the agreed-upon payments.

Financial Intermediation

A process where financial institutions serve as intermediaries between savers and borrowers, facilitating the flow of funds in the economy.