Responses: 1. Consolidation of subsidiary is required. 2. Consolidation of subsidiary is allowed but not required. 3. Consolidation of subsidiary is not allowed.
For each parent-subsidiary relationship below, determine the proper accounting treatment by selecting the appropriate response in the menu to the left of each statement.
1. Subsidiary is in bankruptcy.
2. Subsidiary is in a foreign country where severe restrictions have been imposed by that government.
3. Parent has active plans to sell subsidiary in the near future.
4. Parent company is a manufacturing operation whereas subsidiary is a finance operation.