All of the Following Are Acceptable Methods to Account for a Majority-Owned

question 102

Multiple Choice

All of the following are acceptable methods to account for a majority-owned investment in subsidiary except

• A) The equity method.
• B) The initial value method.
• C) The partial equity method.
• D) The fair-value method.

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Definitions:

Present Value

The present value of an anticipated amount of money or series of payments, considering a certain rate of return.

Net Present Value

Net Present Value (NPV) is a method used in capital budgeting to evaluate the profitability of an investment or project, calculating the difference between the present value of cash inflows and outflows over a period of time.

Interest Rate

The fraction of a loan subject to interest charges to the borrower, usually shown as an annual percentage of the remaining loan balance.

Investment

The process of allocating resources, usually money, with the expectation of generating an income or profit.