If the Parent Company Used the Equity Method to Account

question 14

Multiple Choice

If the parent company used the equity method to account for its investment and the subsidiary company showed a profit for the past year, the consolidation elimination entry required to remove a subsidiary's income from the parent's books prior to the preparation of consolidated financial statements would be:

• A)
• \(\begin{array}{|l|r|r|}
• \hline& \text { Debit } & \text { Credit } \\
• \hline \text { Equity method income-Parent } & \$ \$ \$ & \\
• \hline \text { Retained Earnings - Parent } & & \$ \$ \$\\\hline
• \end{array}\)
• B)
• \[\begin{array} { | l | r | r | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Equity method income-Parent } &\$ \$\$ \\
• \hline \text { Investrnent in Subsidiary } & &\$ \$\$ \\
• \hline
• \end{array}\]
• C)
• \[\begin{array} { | l | r | r | }
• \hline & \text { Debit } & \text { Credit } \\
• \hline \text { Equity method income-Parent } &\$\$\$ \\
• \hline \text { Acquisition Differential } & &\$\$\$ \\
• \hline
• \end{array}\]

Understand the principles and legislation behind pay equity including the misconception that pay equity equates to equal pay for identical work.

Recognize the function and limitations of the Canadian Human Rights Commission (CHRC) within the context of human rights and discrimination complaints.

Discriminate between the scopes of federal and provincial human rights laws and their application in different industries.

Comprehend the meaning and application of bona fide occupational qualifications (BFOQ) in employment contexts.

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Definitions:

Hedges

Financial strategies or instruments used to offset potential losses or gains in another investment or position.

Market Rate

The prevailing interest rate or cost of borrowing in the financial markets, or the standard price in the marketplace for a certain good or service.

Historical Cost Accounting

An accounting method in which assets and liabilities are recorded at their values at the time of purchase or acquisition, without considering inflation.

Bondholders

Bondholders are investors or entities that own bonds issued by corporations, governments, or other organizations, entitling them to receive fixed interest payments and the return of principal at maturity.