Consolidated Net Income Would Be

question 1

Multiple Choice

Consolidated Net Income would be:

• A) higher if the parent chooses to use Equity Method rather than the Cost Method.
• B) higher if the parent chooses to use the Equity Method rather than the Cost Method, provided that the subsidiary showed a profit.
• C) lower if the parent chooses to use Equity Method rather than the Cost Method.
• D) the same under both the Cost and Equity Methods.

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Definitions:

Strict Liability

denotes a legal principle where a party can be held responsible for damages or loss without the plaintiff having to prove negligence or fault.

Punitive Damages

Financial compensation awarded to a plaintiff to punish the defendant for particularly harmful behavior and deter future similar actions.

Inherently Dangerous

Refers to activities or substances that, by their nature, pose a significant risk of harm.

Superseding Cause

A superseding cause is an unforeseeable event that interrupts the chain of causation, relieving a defendant from liability for harm caused after the event.