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:

ATM

An Automated Teller Machine, a banking terminal that allows customers to perform financial transactions, such as cash withdrawals and deposits, without the need for a human cashier.

Debit

To deduct, to charge; a charge added to existing balance.

Personal Identification Number

A unique numerical code used in securing access to accounts or systems, often a password or security measure.

Payee's Signature

The signature of the individual or entity entitled to receive payment on a financial document, such as a check.