Which of the following statements is true regarding mutual ownership between a parent and its subsidiary?
A) The shares of the parent held by a subsidiary should be treated as outstanding stock on the consolidated balance sheet.
B) Only the subsidiary's shares held by the parent should be eliminated in consolidation.
C) The treasury stock approach is required to reflect parent shares held by the subsidiary.
D) The treasury stock approach is required to eliminate subsidiary shares held by the parent company.
E) The parent company does not need to file consolidated financial statements if there is mutual ownership.

Question

Quizplus · Accepted Answer

In mutual ownership, the treasury stock approach is used to account for the parent company's shares held by the subsidiary, treating them as treasury stock and eliminating them in consolidation.

Which of the Following Statements Is True Regarding Mutual Ownership