Under the Equity Method, Which of the Following Statements Is

question 44

Multiple Choice

Under the Equity 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:

Unionization

The process of forming or joining a labor union, where a group of workers collectively negotiates with employers for better wages, benefits, and working conditions.

Unfair Representation

A situation where a group or individual is inadequately or unjustly represented, potentially leading to biased outcomes or decisions.

Grievance-Handling Procedure

A formal process established within an organization for addressing and resolving complaints or disputes raised by employees.

Wildcat Strikes

Unofficial labor strikes that occur without the formal authorization or support of a labor union, often in response to urgent or unaddressed grievances.