All of the Following Statements Regarding Accounting for Influential Securities

question 32

Multiple Choice

All of the following statements regarding accounting for influential securities under U.S.GAAP and IFRS are true except:

• A)Under the equity method,the share of investee's net income is reported in the investor's income in the same period the investee earns that income.
• B)Under the consolidation method,investee and investor revenues and expenses are combined.
• C)Under the equity method,the investment account equals the acquisition cost plus the share of investee income plus the share of investee dividends.
• D)Under the consolidation method,nonintercompany assets and liabilities are combined (eliminating the need for an investment account).
• E)U.S.GAAP companies commonly refer to noncontrolling interests in consolidated subsidiaries as minority interests whereas IFRS companies use noncontrolling interests.

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Definitions:

Financial Statement Analysis Report

A comprehensive evaluation of a company's financial statements aimed at understanding its performance, position, and future potential.

Evidential Conclusions

Conclusions drawn based on evidence gathered during an audit, investigation, or analysis, serving as a foundation for decision-making or recommendations.

Management Standards

Guidelines and criteria set to achieve and maintain a high level of performance and integrity in business operations.

Financial Statement Analysis

The examination and interpretation of financial statements to gain an understanding of a company's financial health and to make informed business decisions.