The Power to Participate in the Financial and Operating Policy

question 5

Multiple Choice

The power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies is referred to as:

• A)significant influence
• B)contributory influence
• C)dominant influence
• D)none of the above

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Definitions:

Capital Balance

The amount of capital recorded in a company's accounts, representing the sum of the initial capital invested and additional contributions, minus any withdrawals.

Goodwill

An intangible asset that arises when a business is acquired for more than the fair value of its net identifiable assets, representing future economic benefits.

Capital Balances

Refer to the cumulative amounts of money or value that partners or shareholders have contributed to a company, inclusive of earnings and minus any losses.

Profits and Losses

A financial statement that summarizes the revenues, costs, and expenses incurred during a specific period.