One Weakness Associated with the Entity Theory Is That

question 38

Multiple Choice

One weakness associated with the Entity Theory is that:

• A) it is inconsistent with the historical cost principle.
• B) non-controlling interest (NCI) is computed using the fair market values of the subsidiary's net assets.
• C) non-controlling interest (NCI) is computed using the book values of the subsidiary's net assets.
• D)the presumed acquisition cost may be unrealistic when the parent purchases significantly less than 100% of the subsidiary's voting shares, or voting control is achieved incrementally.

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Definitions:

Social Contract

A theoretical framework that posits individuals have consented, either explicitly or tacitly, to surrender some of their freedoms and submit to the authority of the ruler or magistrate (or to the decision of a majority), in exchange for protection of their remaining rights.

Ethical Theories

Philosophical ideas or principles that guide decisions about what is morally right and wrong.

Character

The mental and moral qualities distinctive to an individual, which define their nature and actions in various situations.

Conduct

The manner in which a person behaves, especially on a particular occasion or in a specific context.