Which of the Following Is True Concerning the Treasury Stock

question 61

Multiple Choice

Which of the following is true concerning the treasury stock approach in accounting for a subsidiary's investment in parent company stock?

• A) The original cost of the subsidiary's investment reduces long-term liabilities.
• B) The cost of parent shares is treated as if the shares are no longer outstanding.
• C) The subsidiary must apply the equity method in accounting for the investment if the treasury stock approach is used.
• D) The treasury stock approach increases total stockholders' equity.
• E) The cost of parent shares is treated as if the shares are no longer issued.

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Definitions:

Advertising

The practice of promoting products, services, or ideas through various media channels to influence consumer behavior.

Divorce

The legal termination of a marriage by a court or other competent body, dissolving the bonds of matrimony between a married couple.

Early Marriage

The practice of marrying at a young age, often defined differently across cultures, and frequently discussed in terms of its social, economic, and health impacts.

Equity Principle

The principle suggesting fairness is achieved when the ratio of an individual's inputs to outcomes is equal to that of others.