When a parent company requires its wholly owned subsidiary to use push-down accounting, the subsidiary records an account called re-evaluated capital. This account represents

a. the increase in fair market value and goodwill components of the parents purchase price.

b. the ending balance of the investment account on the parents books using the equity method.

c. the increase in fair market value of the subsidiarys stock as a result of the purchase.

d. the new owners equity account of the subsidiary after elimination of common stock and retained earnings.

13. Purple Company owns 60% of the stock of Sapphire, Inc.; 75% of the stock of Green Company; and 40% of Blue, Inc. Sapphire owns 30% of Yellow, Inc. and 20% of Blue, Inc. Which companies will be consolidated with Purple?

a. Sapphire and Green b. Sapphire, Blue and Yellow

c. Green, Blue, and Sapphire d. Sapphire, Green, Blue and Yellow