Ben, Inc Follows IFRS for Its External Financial Reporting

question 41

Multiple Choice

Ben, Inc. follows IFRS for its external financial reporting. Ben, Inc. owns 25% of the outstanding stock of Black, Inc. and accordingly uses the equity method to account for its investment. Which of the following is true regarding Ben, Inc.'s policies related to Black, Inc.?

• A) Ben, Inc. will increase the investment account for its pro-rata share of Black, Inc.'s net loss for the year.
• B) Ben, Inc. will increase the investment account for its pro-rata share of the dividends paid out by Black, Inc. for the year.
• C) Ben, Inc. will conform the accounting policies of Black, Inc. to its own accounting policies.
• D) None of these is true regarding how Ben, Inc. accounts for its investment in Black, Inc.

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Definitions:

Reduced Rework

Strategies or practices aimed at minimizing the need to redo or correct work, thereby increasing efficiency and productivity.

Timing

The selection of the most appropriate or effective time to perform an action or release information.

Success

The achievement of a goal or the attainment of higher status or position.

Message

A piece of information or communication sent from one person or group to another, typically involving a sender, a message, and a recipient.