In Reporting Consolidated Earnings Per Share When There Is a Wholly

question 108

Multiple Choice

In reporting consolidated earnings per share when there is a wholly owned subsidiary, which of the following statements is true?

• A) Parent company earnings per share equals consolidated earnings per share when the equity method is used.
• B) Parent company earnings per share is equal to consolidated earnings per share when the initial value method is used.
• C) Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value exceeds book value.
• D) Parent company earnings per share is equal to consolidated earnings per share when the partial equity method is used and acquisition-date fair value is less than book value.
• E) Preferred dividends are not deducted from net income for consolidated earnings per share.

---

Definitions:

Reversible Image

An optical illusion or figure that can be perceived in more than one way, revealing two distinct images depending on how it is interpreted.

Salvador Dalí

A prominent Spanish surrealist artist known for his striking and bizarre images in his art.

Human Perception

The process by which humans interpret and make sense of sensory information from their environment.

Gestalt Psychologists

Psychologists associated with the Gestalt school of thought, which emphasizes that the whole of anything is greater than its parts.