Consolidated Net Income May Include the Parent's Separate Operating Income

question 9

Multiple Choice

Consolidated net income may include the parent's separate operating income plus the parent's share of the subsidiary's reported net income:

• A)plus the unrealized profit on upstream intercompany sales of inventory made during the current year.
• B)plus the profit realized this year from upstream intercompany sales of inventory made last year.
• C)plus unrealized profit on downstream intercompany sales of inventory made during the current year.
• D)minus the parent's share of profit realized this year from upstream intercompany sales of inventory made last year.

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Definitions:

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account after a purchase has been made, to keep the account open.

Initial Margin

The minimum amount of funds required to open a new position in a securities or futures contract, intended to cover some of the credit risk of market participants.

Primary Market

The financial market for new securities issues, where companies sell new stocks and bonds directly to investors.

Investment Bankers

Firms specializing in the sale of new securities to the public, typically by underwriting the issue.