Penn Inc., a manufacturing company, owns 75 percent of the common stock of Sell

Question

Penn Inc., a manufacturing company, owns 75 percent of the common stock of Sell Inc., an investment company. Sell owns 60 percent of the common stock of Vane Inc., an insurance company. In Penn's consolidated financial statements, should Sell and Vane be consolidated or reported as equity method investments (assuming there are no side agreements)?

Consolidation used for Sell and equity method used for Vane.

Consolidation used for both Sell and Vane.

Equity method used for Sell and consolidation used for Vane.

Equity method used for both Sell and Vane.

Penn Inc., a manufacturing company, owns 75 percent of the common stock of Sell Inc., an investment company. Sell owns 60 percent of the common stock of Vane Inc., an insurance company. In Penn's consolidated financial statements, should Sell and Vane be consolidated or reported as equity method investments (assuming there are no side agreements)?

Explanation / Answer

The correct option is

B. Consolidation used for both sell and vane

Here all the assets and liabilities of the subsidiaries will appear on the balance sheet of the parent co. Here the sell is teh parent co and vane is the subsidiary co.

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.