Not Every Country Uses the Same Conceptual Framework

question 43

Multiple Choice

Not every country uses the same conceptual framework. This lack of uniformity has arisen because

• A) there are not enough members in the professional body.
• B) no time is available to complete the framework.
• C) there are differences in legal and government systems.
• D) financial statements do not need to be comparable.

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Definitions:

Retained Earnings

Profits generated by a company that are not distributed to shareholders as dividends but are kept as reinvestment in the company or to pay off debt.

Fair Value

What one would receive for selling an asset or pay to transfer a liability in a structured deal among those active in the market at the point of measurement.

Full Goodwill Method

An accounting method that recognizes goodwill based on the full fair value of a subsidiary, not just the portion acquired by the parent company.

Non-controlling Interest

A minority stake in a company that is not enough to control company decisions, represented as a separate component of equity in the consolidated financial statements.