In a business combination resulting in a parent company-subsidiary affiliation, the parent company's Investment in Subsidiary Common Stock ledger account is not closed, as it is in other types of business combinations.

Question

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The Investment in Subsidiary Common Stock account is not closed because it represents the parent company's ongoing ownership interest in the subsidiary, which continues to exist as long as the subsidiary is part of the corporate structure.

In a Business Combination Resulting in a Parent Company-Subsidiary Affiliation