A subsidiary owns shares of its parent company. Which of the following is true concerning the treasury stock approach?
A) it is one of several options to account for mutual holdings available under current accounting standards.
B) The original cost of the subsidiary's investment is a reduction in consolidated stockholders' equity.
C) The subsidiary accrues income on its investment by using the equity method.
D) the treasury stock approach eliminates these shares entirely within the consolidation process.
Answer: B) The original cost of the subsidiary's investment is a reduction in consolidated stockholders' equity.
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