A Company Is Not Required to Consolidate a Subsidiary in Which

question 53

Multiple Choice

A company is not required to consolidate a subsidiary in which it holds more than 50% of the voting stock when

• A)the subsidiary is located in a foreign country.
• B)the subsidiary in question is a finance subsidiary.
• C)the company holds more than 50% but less than 60% of the subsidiary's voting stock.
• D)the company holds less than 75% of the subsidiary's voting stock.
• E)the subsidiary is in bankruptcy.

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Definitions:

Accounts Receivable

The money owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Step-Variable Cost

Costs that are fixed over a small range of activity but can change with significant changes in the volume of activity.

Sunk Cost

Expenses already incurred and which cannot be recovered, and should not be considered when making future business decisions.

Direct Manufacturing Cost

The sum of all costs directly tied to the production process, including direct labor and raw materials.