When a Parent Uses the Partial Equity Method Throughout the Year

question 42

Multiple Choice

When a parent uses the partial equity method throughout the year to account for investment in a subsidiary,which of the following statements is false before making adjustments on the consolidated worksheet?

• A)Parent company net income will equal controlling interest in consolidated net income when initial value,book value and fair value of the investment are equal
• B)Parent company net income will exceed controlling interest in consolidated net income when fair value acquired exceeds book value
• C)Parent company net income will be less than controlling interest in consolidated net income when fair value acquired exceeds book value
• D)Goodwill will be recognized if acquisition value exceeds fair value
• E)Subsidiary net assets are valued at their book values

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Definitions:

Servicescape

The physical environment of a service delivery, influencing customer perceptions and behaviors within a service setting.

JIT Partnership

denotes a collaborative arrangement between suppliers and buyers where just-in-time manufacturing principles are applied, aiming to minimize inventory levels and streamline production processes.

Inventory

The total amount of goods or materials contained in a store or factory at any given time.

JIT Systems

JIT, or Just-In-Time Systems, refer to an inventory management strategy aiming to decrease waste and increase efficiency by receiving goods only as they are needed in the production process.