The Following Information Is Provided: the Margin of Safety

question 50

Multiple Choice

The following information is provided: The margin of safety is

• A) 2,000 units.
• B) 3,000 units.
• C) 5,000 units.
• D) 7,000 units.

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Definitions:

Investor's Share

The portion of an investment's returns or an enterprise's profits allocated to an investor, based on the ownership percentage.

Asset Revaluation Surplus

Excess amount by which an asset's carrying amount is increased upon its revaluation, reported in equity under other comprehensive income.

Investment in Associate

An investment in associate refers to an investment in another entity where the investor has significant influence, usually indicated by owning 20% to 50% of the voting stock, but not control, over the investee.

Equity Method

is an accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the investee's net profit or loss.