On the consolidated balance sheet, consolidated stockholders' equity is:
A) equal to the sum of the parent and subsidiary stockholders' equity.
B) greater than the parent's stockholders' equity.
C) less than the parent's stockholders' equity.
D) equal to the parent's stockholders' equity.

Question

Quizplus · Accepted Answer

Consolidated stockholders' equity is equal to the parent's stockholders' equity because, in consolidation, the equity of the subsidiary is not directly added to the parent's equity. Instead, the investment in the subsidiary is replaced by the subsidiary's assets and liabilities, affecting the consolidated balance sheet's assets and liabilities but not the consolidated stockholders' equity, which remains equal to the parent's stockholders' equity.

On the Consolidated Balance Sheet, Consolidated Stockholders' Equity Is