The Following Is an Extract from the Minority Interest Memorandum

question 32

Multiple Choice

The following is an extract from the minority interest memorandum, used to calculate minority interests. Both subsidiaries became members of the economic entity at the same time at the start of this current period.

The line item 'Dividend received from entity within the group' is an adjustment made:

• A) to prevent double-counting as the indirect minority interest of Barbie Ltd is in fact the same interest as the direct minority interest in Ken Ltd; and would have already received a share of the dividend as part of the share of profit in Ken Ltd.
• B) to recognise, and eliminate, the dividend paid by Barbie Ltd directly to the parent entity.
• C) to prevent double-counting as the indirect minority interest of Ken Ltd is in fact the same interest as the direct minority interest in Barbie Ltd; and would have already received a share of the dividend as part of the share of profit in Ken Ltd
• D) to recognise, and eliminate, the dividend paid by Ken Ltd directly to the parent entity.
• E) None of the given answers.

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Definitions:

Capital Formation

The process of building up a stock of physical and financial assets in an economy, typically through savings and investments.

Economic Growth

An increase in the amount of goods and services produced per head of the population over a period of time, often measured as the annual percentage increase in real GDP.

Social Overhead Capital

Infrastructure and public goods provided by the government or public sector, essential for economic activities and societal well-being, such as roads, schools, and hospitals.

Developing Country

A nation with a lower level of industrialization, lower living standards, and lower Human Development Index scores compared to developed countries.