Which of the Following Statements Is True Regarding the Subsidiary's

question 58

Multiple Choice

Which of the following statements is true regarding the subsidiary's investment in its parent's common stock?

• A) All of the parent company's common stock is eliminated.
• B) The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to treasury stock.
• C) The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to retained earnings.
• D) The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to additional paid-in capital.
• E) The investment in parent company's common stock is not eliminated in consolidation.

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Definitions:

Free On Board

A shipping term indicating whether the seller or the buyer is responsible for goods that are damaged or destroyed during shipping.

Sales Tax

A government-imposed charge on the sale of goods and services.

Account Receivable

Money owed to a business by its clients or customers for goods or services delivered but not yet paid for.

Credit Terms

Terms for payment on account by the buyer to the seller.