One Weakness Associated with the Entity Theory Is That

question 18

Multiple Choice

One weakness associated with the Entity Theory is that:

• A) it is inconsistent with the Historical Cost Principle.
• B) Non-Controlling Interest is computed using the fair market values of the subsidiary's net assets.
• C) Non-Controlling interest 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.

---

Definitions:

Normal Distribution

A bell-shaped distribution characterized by its mean and standard deviation, where the mean, median, and mode are all equal.

Normally Distributed

Refers to a distribution that follows the normal (bell-curve) shape, characterized by a symmetric shape around the mean, indicating random variables with equal mean, median, and mode.

Spearman Rank

A nonparametric measure of rank correlation that assesses how well the relationship between two variables can be described using a monotonic function.

Ordinal Variables

Variables that represent categories with a natural order or ranking among them, though the intervals between the rankings may not be equal.