Where an Acquisition in an Associate Results in an Excess

question 27

Multiple Choice

Where an acquisition in an associate results in an excess, how is the excess accounted for in the year of acquisition?

• A) CR Investment in associate account.
• B) CR Share of associate profit account.
• C) DR Share of associates retained earnings account.
• D) No adjustment is required due to the single line method of accounting followed under the equity method.

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Definitions:

Behavioural Decision Model

A theoretical framework focusing on the cognitive, social, and emotional influences on individual and collective decision-making processes.

Bounded Rationality

A concept suggesting that in decision-making, individuals are limited by the information they have, their cognitive limitations, and the finite amount of time they have to make a decision.

Limited Information

A scenario where decision-makers have only a partial view or incomplete data about a situation or problem.

Heuristics

Mental shortcuts that allow people to solve problems and make judgements quickly and efficiently.