The Parent Company Records Its Share of a Subsidiary's Income

question 38

Multiple Choice

The parent company records its share of a subsidiary's income by:

• A) crediting Investment in S Company under the partial equity method.
• B) crediting Equity in Subsidiary Income under both the cost and partial equity methods.
• C) debiting Equity in Subsidiary Income under the cost method.
• D) none of these.

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Definitions:

Current Assets

Resources that are anticipated to be turned into cash, sold, or utilized within a year or during the standard operational cycle of a company.

Goodwill

An intangible asset that represents the value of a company's brand name, solid customer base, good customer relations, good employee relations, and any patents or proprietary technology.

Intangible Assets

Assets that cannot be physically touched or held, such as patents, trademarks, and goodwill.

Tangible Assets

Physical and material assets, such as machinery, buildings, and land, that have a value and can be seen and touched.