Chapter 15, Problem 12QS

To determine

Concept Introduction:

The various terms are used here.

The terms that are used here are $–$

a. Subsidiary $–$

A subsidiary is the company whose shares are bought by another company. But the purchasing company must buy shares more than 50% of ownership.

b. Parent $–$

A parent company is the company shares of the other company more than 50% of ownership. The company whose shares are bought by another company is treated as subsidiary.

c. Interest revenue $–$

It is the revenue earned on the debt securities. The debt securities can be available-for-sale as well long term

d. Current assets $–$

The assets which are held for a short-period.

e. Fair value $–$

It is the market value of something at the prevailing time. Fair value if used to record available-for-sale securities on the balance sheet.

f. Equity method $–$

This method is used in case, a company purchased investment ranging from 20 % to 50 % of ownership and that gives a significant control to the investor over the investee.

The mentioned terms have been discussed.

To complete:

The descriptions by filling in the blanks using the terms given.

Given terms $–$

a. Subsidiary

b. Parent

c. Interest revenue

d. Current

e. Fair value

f. Equity method