Which of the Following Statements Is Correct

question 53

Multiple Choice

Which of the following statements is correct?

• A)An inventory blanket lien gives the lending institution a lien against all of the borrower's inventories. However, the borrower must maintain a base inventory as collateral equal to the level that existed when the loan was granted.
• B)A disadvantage of trust receipt financing is the requirement that a trust receipt be issued for specific goods. As a result of this inconvenience, warehousing has become popular as a method of securing loans with inventory.
• C)The fixed costs of a field warehousing arrangement are relatively small and, thus, many small firms make such arrangements.
• D)The use of inventory financing, especially field warehouse financing, as a source of funds for firms has the advantage of small fixed costs but the disadvantage of a lack of spontaneous growth of funds as inventories increase.

Analyze the effect of non-controlling interests on consolidated financial statements.

Apply fair value adjustments in the context of business combinations.

Understand the mechanics of the Equity Method for accounting for investments.

Understand and apply the Fair Value Enterprise (FVE) Method for valuing non-controlling interests.