If the Non-Controlling Interest at Acquisition Is Based on the Fair

question 18

Multiple Choice

If the non-controlling interest at acquisition is based on the fair value of the subsidiary's identifiable net assets, which consolidation theory is being applied?

• A) The proprietary theory.
• B) The parent company theory.
• C) The entity theory.
• D)The parent company extension theory.

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Definitions:

Policy Decision Making

The process by which governments or organizations establish rules, directives, and guidelines to influence and determine present and future decisions.

Interrelationships

Mutual or reciprocal relations between components within a system, indicating how they influence or interact with each other.

Cost Method

An accounting method used for recording investments, where the investment is recorded at its acquisition cost without recognizing periodic income but dividends received are recorded as income.