When indirect horizontal holdings exist, the consolidated net income is determined under the treasury stock method, which is part of the parent company concept.

Question

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The treasury stock method is used for calculating diluted earnings per share, not for determining consolidated net income. Consolidated net income under indirect horizontal holdings is determined by combining the net incomes of the parent and subsidiary companies, adjusting for intercompany transactions.

When Indirect Horizontal Holdings Exist, the Consolidated Net Income Is