Where There Are Transactions Between the Investor and Associate That

question 40

Multiple Choice

Where there are transactions between the investor and associate that result in an unrealised profit, the investor's share of the associate's profit is:

• A) not adjusted at all regardless of whether the transaction is an upstream or downstream one.
• B) adjusted only if the transaction is an upstream one.
• C) adjusted only if the transaction is a downstream one.
• D) adjusted regardless of whether the transaction is an upstream or downstream one.

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Definitions:

Discount Factor

A multiplier used in time value of money calculations to determine the present value of a future sum or cash flow.

Straight-Line

A method of calculating depreciation of an asset, whereby its cost is evenly spread over its useful life.

Cash Payback Period

The time it takes for a business to recover its investment in a project solely from cash flows, used to assess the risk or attractiveness of an investment.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the consumption of the asset.