Mali Corporation Uses the Cost Model to Account for Its

question 45

Multiple Choice

Mali Corporation uses the cost model to account for its property, plant and equipment, which were acquired on January 1, 2017 for $175,000.Mali uses straight-line depreciation and estimates the assets will have a ten year life with no residual value.Assuming Mali did not experience any impairment losses, the December 31, 2018 net book value of the assets is

• A)$175,000.
• B)$157,500.
• C)$140,000.
• D)$136,000.

Calculate the gain or loss on share transactions under the equity method.

Understand how transactions influence consolidated cash flows and equity.

Understand the concept of consolidation, including the equity method of accounting for investments.

Calculate non-controlling interests and their impact on consolidated financial statements.

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Definitions:

Fixed Cost

Costs that do not vary with the level of output or production in the short term, such as rent, salaries, and insurance premiums.

Lawn-mowing

The process of cutting grass to a uniform length, typically performed as a maintenance activity for aesthetic and health reasons in gardens and lawns.

Variable Costs

Expenditures that change in direct correlation with the amount of output or production.

Profit-maximizing Output

The level of production at which a firm can achieve the highest possible profit, given its cost structure and the price of its products or services.