If a parent company owns 90% of a subsidiary company's outstanding common stock, the compnay should generally account for the income of the subsidiary under the fair value method? True or False.
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If a parent company owns 90% of a subsidiary company's outstanding common stock, the compnay should generally account for the income of the subsidiary under the fair value method? True or False.
The answer is false--You only use the fair value method when the investor (parent) possesses only a small percentage of the investee (subsidiary) company's outstanding stock--When the parent company owns over 50% of the subsidary's otstanding voting stock (as it is in this case), then the parent company should use the consolidated method:)
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