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Question
For equity stakes in subsidiaries where the stake is between 20 and 50 percent of the subsidiary, the holding is recorded on the balance sheet at:
a) Market value, and the parent’s portion of the subsidiary’s profits are shown below operating profit on the parent company’s income statement.
b) Historical cost plus reinvested income, and the parent’s portion of the subsidiary’s profits are shown in the regular operating profit of the parent company.
c) Market value, and the parent’s portion of the subsidiary’s profits are shown in the regular operating profit of the parent company.
d) Historical cost plus reinvested income, and the parent’s portion of the subsidiary’s profits are shown below operating profit on the parent company’s income statement.
Answer
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