If a parent company has two wholly owned subsidiaries

135. If a parent company has two wholly owned subsidiaries, how many legal and economic
entities are there from the viewpoint of the shareholders of the parent company?
Legal Economic
a. 3 3
b. 1 2
c. 3 1
d. 2 1
Ans: C, LO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA:
Reporting
136. When a company owns more than 50% of the common stock of another company
Reporting
137. In recognizing a decline in the fair value of short-term stock investments, an Unrealized
Loss account is debited because
FSA
138. Which of the following statements is true about investments classified as trading
securities?
Investment Decisions
139. The Fair Value Adjustment account
a. is set up for each security in the company's portfolio.
b. relates to the entire portfolio of securities held by the company.
c. is closed at the end of each accounting period.
d. appears on the income statement as Other Expenses and Losses.
Ans: B, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BB: Legal/Regulatory Perspective, AICPA FC: Reporting, AICPA PC: None, IMA:
Investment Decisions
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