David's Microchip Company (DMC) Produces Microchips for MP3 Players, Which

question 44

Multiple Choice

David's Microchip Company (DMC) produces microchips for MP3 players, which it sells for $18 million to John Smith Electronics (JSE) . JSE's MP3 players are sold for a total of $22 million. What is the value added to JSE?

• A) $6 million
• B) $10 million
• C) $4 million
• D) $26 million

---

Definitions:

FVTPL

Stands for Fair Value Through Profit or Loss, an accounting measure where financial assets and liabilities are recorded at their current market value and changes in fair value are recognized in profit or loss.

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, including all recognized income and expenses, both realized and unrealized.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and adjusted thereafter for the post-acquisition changes in the investee's net assets.

Common Shares

Equity securities that represent ownership interests in a corporation, including voting rights and dividends.