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    kab242003's Avatar
    kab242003 Posts: 1, Reputation: 1
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    #1

    Oct 6, 2007, 08:15 PM
    parent company, fair value method
    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.
    smartlady55's Avatar
    smartlady55 Posts: 1, Reputation: 1
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    Mar 8, 2008, 03:29 PM
    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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