In the Year When One Member of a Consolidated Group

question 6

Multiple Choice

In the year when one member of a consolidated group purchases from outside parties the bonds of another affiliate, the consolidated income statement includes:

• A)​a gain if purchased above book value.
• B)​a gain if purchased below book value.
• C)​a loss if purchased below book value.
• D)​a deferred gain if purchased above book value.

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Definitions:

Irving Janis

A psychologist best known for his research on group dynamics, including the concept of "groupthink."

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony or conformity in the group results in an irrational or dysfunctional decision-making outcome.

Group Solidarity

The unity, shared purposes, and sense of belonging that members of a group feel toward each other and the collective.

Group Member

An individual who belongs to a group, sharing common goals or interests and participating in collective activities.