Under the Cost Method, Which of the Following Statements Is

question 38

Multiple Choice

Under the Cost Method, which of the following statements is TRUE?

• A) The parent's investment in the subsidiary is recorded at cost, and only changed thereafter if there has been a permanent impairment in the value of the investment.
• 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 any excess dividends received from the subsidiary.

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Definitions:

Implemented

The process of putting a decision, plan, strategy, or law into effect in a practical situation.

Tacit Knowledge

Tacit knowledge is the unexpressed, internally held knowledge that people carry, shaped by their experiences and contexts, and difficult to articulate or transfer to others.

Experiential Learning

An educational approach that emphasizes learning through direct experience, often involving hands-on or practical activities.

Knowledge Management

Involves the gathering, organizing, sharing, and analyzing of an organization's knowledge in terms of resources, documents, and people skills.