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Which one of the following methods, if any, may a parent use on its
books to carry an investment in a subsidiary that it will consolidate?
Question 11
Parco owns 100% of its subsidiary, Subco, which it acquired at book
value. It carries its investment in Subco on its books using the equity
method of accounting. At the beginning of its 2009 fiscal year, the
investment in Subco account was $552,000. During 2009 Subco reported
the following: In preparing its 2009 fiscal year consolidated statements,
which one of the following is the total amount of equity revenue that
Parco will have to reverse for 2009 as a result of it ownership of Subco?
Question 12
Which of the following kinds of transactions should be eliminated in the
consolidating process?
Question 13
Which of the following statements concerning the primary beneficiary of
a variable-interest entity is/are correct? I. The primary beneficiary has
the ability to direct the most significant economic activities of the
variable-interest entity. II. Only one entity can be the primary
beneficiary of a variable-interest entity. III. The investor that has the
greatest equity ownership in a variable-interest entity will be the primary
beneficiary of the entity.
Question 14
Sun Co. is a wholly owned subsidiary of Star Co. Both companies have
separate general ledgers, and prepare separate financial statements. Sun
requires stand-alone fi nancial statements. Which of the following
statements is correct?