- 77 - (2) Circle the correct answer to each of the following statements and cases: 1. The plant and equipment of a purchased subsidiary may be either continued in use or scheduled for sale. How should such plant and equipment be valued under APB Opinion No. 16 ? A. To Be Used Replacement Cost Replacement Cost Net Realizable Value Net Realizable Value To Be Sold Replacement Cost Net Realizable Value Net Realizable Value Replacement Cost D. A parent Company paid $500,000 in cash for 80 percent of the outstanding vous stock of a subsidiary, and incurred the following relevant cost elements: Preacquisition audit Legal fees for drawing up purchase agreement Closing of duplicate facilities $10,000 14,000 25,000 The investment in Subsidiary Stock should have the following balance just after the acquisition is recorded : A. $524,000 $525,000 $544,000 $549,000 3. The elimination entries in the consolidated working paper are recorded : A. On the parent's books only. On the subsidiary's books only. On both the parent's and the subsidiary's books. On neither the parent's nor the subsidiary's books. D. What are the criteria for the preparation of consolidated statements under the SEC's Regulation S-X and FASB Statement No. 94 ? A. Regulation S-X Majority Ownership Majority Ownership Control of Operations Control of Operations FASB Statement No. 94 Majority Ownership Control of Operations Majority Ownership Control of Operations