Which of the following statements is true regarding the subsidiary's investment in its parent's common stock?
A) All of the parent company's common stock is eliminated.
B) The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to treasury stock.
C) The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to retained earnings.
D) The consolidation worksheet entry to eliminate the subsidiary's investment in parent's common stock is debited to additional paid-in capital.
E) The investment in parent company's common stock is not eliminated in consolidation.

Question

Quizplus · Accepted Answer

The consolidation worksheet entry to eliminate the subsidiary's investment in the parent's common stock is typically debited to treasury stock, as it is treated as if the parent reacquired its own shares.

Which of the Following Statements Is True Regarding the Subsidiary's