When preparing a consolidated balance sheet:
A) investment in subsidiary will be presented but the shareholders' equity of the subsidiary will be eliminated
B) both investment in subsidiary and the shareholders' equity of the parent will be eliminated
C) neither investment in subsidiary nor the subsidiary's shareholders' equity will be presented
D) the shareholders' equity of the parent will be eliminated but investment in subsidiary will be presented

Question

Quizplus · Accepted Answer

In a consolidated balance sheet, the investment in the subsidiary is eliminated against the subsidiary's equity because the consolidated balance sheet presents the financial position as if the parent and subsidiary are a single entity. Therefore, neither the investment in the subsidiary nor the subsidiary's shareholders' equity is presented; instead, their combined assets, liabilities, and equity are shown.

When Preparing a Consolidated Balance Sheet