_____ In indirect vertical holdings,
A) The treasury stock method is used.
B) The traditional allocation method is used.
C) A third-tier subsidiary may be consolidated even though 50% or less of its earnings accrue to the top-level parent.
D) A third-tier subsidiary cannot be consolidated unless more than 50% of its earnings accrue to the top-level parent.
E) No subsidiary is also a parent.

Question

Quizplus · Accepted Answer

In indirect vertical holdings, a third-tier subsidiary may be consolidated even if 50% or less of its earnings accrue to the top-level parent, as long as the parent company has control over the subsidiary through its ownership structure. This reflects the principle that consolidation is based on control rather than the proportion of earnings accruing to the parent.

_____ in Indirect Vertical Holdings