Under the Cost Method

question 40

Multiple Choice

Under the Cost Method,

• A)the parent's investment in the subsidiary is recorded at cost,and never changed thereafter.
• B)the parent records its pro rata share of the subsidiary's post-acquisition income as an increase to the investment account and reduces the investment account with its share of the dividends declared by the subsidiary.
• C)the parent records its pro rata share of the subsidiary's cumulative earnings as an increase to the investment account and reduces the investment account with its share of the dividends declared by the subsidiary.
• D)the parent's investment in the Subsidiary is recorded at Cost and reduced by an excess dividends received from the subsidiary.

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Definitions:

Spinal Cord

A long, thin, tubular structure made up of nervous tissue, which extends from the brainstem to the lower back, carrying nerve impulses between the brain and the body.

Reflex Actions

Automatic and involuntary responses to stimuli facilitated by neural pathways known as reflex arcs, crucial for survival by enabling quick reactions without direct involvement of the brain.

Peripheral Nerves

Nerves that are located outside of the brain and spinal cord, responsible for transmitting sensory and motor information between the central nervous system and the rest of the body.

Endorphins

Peptides produced by the central nervous system and the pituitary gland, known for their ability to act as natural painkillers.