_____When a portion of common stock holdings in a subsidiary is sold and the common shares were acquired by the parent in block acquisitions, an acceptable method of relieving the investment account for income tax reporting is:
A) Specific identification.
B) Cost.
C) Equity.
D) Average cost.
E) Last-in, first-out.

Question

Quizplus · Accepted Answer

Specific identification is an acceptable method of relieving the investment account for income tax reporting when a portion of common stock holdings in a subsidiary is sold and the common shares were acquired by the parent in block acquisitions. This method allows the parent company to identify the specific shares that were sold and to use the cost of those shares to calculate the gain or loss on the sale.

_____When a Portion of Common Stock Holdings in a Subsidiary