Lesson 8

Question 1

Holdings of more than 50% is said to have what?

Answer 1

controlling interest

Question 2

In a controlling interest relationship, what the the investor and the investee referred to?

Answer 2

The investor is referred to as the parent.
The investee is referred to as the subsidiary.

Question 3

In holdings of more than 50%, what is the accounting method used?

Answer 3

Consolidating Method

Question 4

What is the consolidating method?

Answer 4

The parent company prepares consolidated financial statements. This treats the parent and the subsidiary corporations as a single economic entity.

Question 5

When doing consolidating financial statements do corporations use the fair value method or the equity method?

Answer 5

Equity method