For each parent-subsidiary relationship below, determine the proper accounting treatment by selecting the appropriate response in the menu to the left of each statement.

1 Subsidiary is in bankruptcy.

2 Subsidiary is in a foreign country where severe restrictions have been imposed by that government.

3 Parent has active plans to sell subsidiary in the near future.

4 Parent company is a manufacturing operation whereas subsidiary is a finance operation.

Select Options

• Consolidation of subsidiary is required.
• Consolidation of subsidiary is allowed but not required.
• Consolidation of subsidiary is not allowed.