Fractal Software Limited Has Acquired a 100% Subsidiary in Malaysia

question 13

Multiple Choice

Fractal Software Limited has acquired a 100% subsidiary in Malaysia that produces keyboards and other types of computer hardware.Fractal is refusing to consolidate its financial statements,as this would increase the debt to equity ratio to the point that Fractal would violate its debt agreement,although it would benefit the current ratio with a sizeable increase in inventory.Instead,Fractal would like to record the investment in the Malaysian subsidiary at cost.What type of effect does the non-consolidation have upon the financial statements?

• A)material and isolated
• B)material
• C)material and pervasive
• D)immaterial

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Definitions:

Confidence Interval

A range of values, derived from sample statistics, that is believed to contain the true population parameter with a certain level of probability.

True Mean

The actual average value of a population or dataset, often estimated through sample means in statistical analysis.

Variance

A measure of the dispersion or spread of a set of data points, calculated as the average squared deviation from the mean.

Confidence Interval

A range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter with a specified degree of confidence.