When an Investor Reporting Under IFRS Owns More Than 20

question 71

Multiple Choice

When an investor reporting under IFRS owns more than 20% of the common shares of a corporation, it is generally presumed that the investor

• A)has insignificant influence on the investee and that the cost method should be used to account for the investment.
• B)should use the fair value through profit or loss model to account for the investment.
• C)will prepare consolidated financial statements.
• D)has significant influence on the investee and that the equity method should be used to account for the investment.

Recognize the difference between business risk and financial risk, and their determinants.

Understand how the optimal capital structure minimizes the weighted average cost of capital (WACC) and maximizes firm value.

Analyze the implications of the static theory of capital structure on financial decision-making.

Identify the conditions under which the interest tax shield adds value to the firm.

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A suffix used in medical terms to denote the surgical crushing of a stone or calculus.

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A suffix used in medical terminology to indicate the surgical removal of a specified part of the body.

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A suffix used in medical terminology to describe conditions related to urine, such as polyuria (production of a large volume of urine) or hematuria (presence of blood in urine).