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2. When the administrative fees are charged by the parent, the earnings of the subsidiary from...

2. When the administrative fees are charged by the parent, the earnings of the subsidiary from the project will appear high to the parent and low to the subsidiary.

True or False

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Answer #1

The given statement is TRUE because when the administrative fees are charged by the parent from the subsidiary it will mean that, the overall profitability of the subsidiary on the individual books of accounts will decrease but the profit of the parent will be increasing due to charging of the administrative fees and hence the the earning of the subsidiary from the project will be appearing higher to the parent and Lower to the subsidiary

The given statement is TRUE.

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