Chapter C, Problem 12QS

To determine

Subsidiary:

Subsidiary is the part of parent. The companies who make investment in the parent companies are the subsidiary companies.

Parent:

The company having more than 50% controlling is parent. The investee invests in the parent company to earn high percentage of return.

Interest Revenue:

The investor invest in the bonds of companies and earn a fixed percentage of interest in return of the amount invested by them in the company, So the interest receive by the investor is known as the interest revenue and it is the income of the investor.

Current Assets:

Current assets are assets which are expected to be converted into cash and cash equivalent within a year. They are also used to pay the current liabilities of the company. It includes cash, short term investment, accounts receivables and other current assets.

Fair Value:

The fair value is the original value of the investment. The companies have to calculate the value of investment yearend with the help of fair value to record in the books of accounts.

Equity Method:

It is a method of ascertaining the profit earn or loss suffered by the companies from their investments. The equity method is a type of accounting technique.

To identify: Select the term or phrase for the given statement.