In January,E-Treme Inc

question 42

Multiple Choice

In January,E-treme Inc.entered into an oral contract with Ralco,LLC,an accounting firm,for the preparation of its tax return.The contract is:

• A) unenforceable under the statute of frauds since it is not in writing.
• B) unenforceable under the UCC since it is not in writing.
• C) enforceable, but only up to a value of $10,000.
• D) enforceable even though it is oral.

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Definitions:

Entity Method

A consolidation method wherein investments in subsidiaries are reported at cost and income from the investment is recognized to the extent of dividends received.

Subsidiary

A company that is controlled by another company, typically through ownership of more than half of its voting stock.

Entity Method

An accounting approach where investments in subsidiaries are recorded at cost or in accordance with specific accounting standards, without consolidating the financial statements of the parent and subsidiary.

Carrying Value

The book value of assets and liabilities as recorded on the balance sheet, calculated as the original cost less any depreciation, amortization, or impairment costs.