Multiple Choice
Both consolidation and equity method accounting assume a dollar earned by a subsidiary is equivalent to a dollar earned for a parent, even if not received in cash. The limitations of this assumption of dollar-for-dollar equivalence include which of the following?
I. Dividends restricted by law and loan covenants.
II. Risks due to political and economic factors.
III. Tax liabilities from remittance of earnings.
IV. Minority interests that limit parent's discretion.
A) None of the above
B) II
C) I and III
D) I, II, III and IV
Correct Answer:
Verified
Correct Answer:
Verified
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