When Are Gains on Intercompany Transfers of Assets Between an Investor

question 18

Multiple Choice

When are gains on intercompany transfers of assets between an investor and a significant influence investment recognized as part of the investment income accounted for by the parent under the equity method?

• A) In the period when the intercompany transfer takes place.
• B) In the period(s) when the assets are sold to third parties or consumed.
• C) They are never recognized.
• D) They are recognized only when the investment is sold.
• Bloom's

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Definitions:

Diluted Earnings Per Share

A calculation of a company's earnings per share adjusted for the impact of all potential dilutive securities, which could decrease earnings per share.

Basic Earnings Per Share

A measure of a company's profitability on a per-share basis, calculated by dividing net income by the average number of shares outstanding.

Common Shares

Equity securities that represent ownership in a corporation, typically with voting rights and potential dividends.

IFRS

International Financial Reporting Standards, a set of accounting standards that guide companies in preparing financial statements globally.