Chapter 15, Problem 6QC

To determine

Concept Introduction:

Consolidation of accounts:

When a company make investment in a company, and if the share purchased by the company represents more than 50 % of the voting stock, then the accounting method that will be used to record the investment is Consolidation of accounts.

In consolidation method, the company who purchases shares more than 50 % will be treated as parent company and the company whose shares are bought is treated as subsidiary company. The financial statements of subsidiary company are consolidated in the financial statements of parent company.

The correct option which is true among the given options