Which of the Following Statements Is Incorrect

question 16

Multiple Choice

Which of the following statements is incorrect?

• A)in sequential consolidation the direct ownership interest of the immediate parent entity would be used to eliminate pre- acquisition capital and reserves
• B)the most important principle underlying the multiple consolidation method is that indirect ownership interests are relevant only to post- acquisition profits and changes in reserves
• C)the sequential consolidation method is less cumbersome to apply than the multiple consolidation method
• D)sequential consolidation and multiple consolidation both generate exactly the same results

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Definitions:

Present Value

The current value of a future amount of money or stream of cash flows, given a specified rate of return.

Required Rate

The minimum return or yield an investment must offer to be considered viable, often referred to as the required rate of return.

Compound Interest

A way of computing interest wherein the initial amount of the loan or deposit and all the interest that has accrued in former periods are included in the calculation.

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, calculated as the discount rate that makes the net present value of all cash flows equal to zero.