Which of the Following Statements Is Incorrect with Regards to Non-Controlling

question 42

Multiple Choice

Which of the following statements is incorrect with regards to non-controlling interests in subsidiaries?

• A) The requirement to eliminate the effects of intragroup transactions holds whether or not there are non-controlling interests.
• B) The non-controlling interest's share in the dividends paid or proposed by the subsidiary is eliminated on consolidation.
• C) The non-controlling interest's share of the profits of the subsidiary is calculated after adjustments to eliminate income and expenses of the subsidiary that are unrealised from the economic entity's perspective.
• D) Management fees paid in an intragroup transaction are considered realised when determining non-controlling interests in a subsidiary.

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Definitions:

Cost of Equity

The return a company requires to decide if an investment meets capital return requirements, often calculated using models like the Capital Asset Pricing Model (CAPM).

After-tax Cost

The expense of an action or transaction after considering the impact of taxes.

Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Growth Rate

The percentage increase in a company's revenue or earnings from one period to the next, demonstrating how quickly it is expanding.