Which of the following statements is true regarding a subsidiary's investment in the parent company's stock?
A. In consolidation, the parent's retained earnings will not be reduced by the dividends it paid to the subsidiary.
B. This corporate combination is known as mutual ownership.
C. The treasury stock approach focuses on the parent's control over its subsidiary.
D. For consolidation, both the parent and subsidiary must defer gross profit on remaining inventory from intra-entity transfers.
E. All of these answer choices are true statements.
Answer: E
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In the process of reconciling its bank statement for April, Donahue Enterprises' accountant compiles the following information: Cash balance per company books on April 30$6,275Deposits in transit at month-end$1,300Outstanding checks at month-end$620Bank charge for printing new checks$45Note receivable and interest collected by bank on Donahue's behalf$770A check paid to Donahue during the month by a customer is returned by the bank as NSF$480The adjusted cash balance per the books on April 30 is:
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