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

question 12

Multiple Choice

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

• A) A non-controlling interest is defined as equity in a subsidiary not attributable, directly or indirectly, to a parent.
• B) Under the entity concept, if subsidiaries are partly owned by the parent entity, both the parent entity and the non-controlling interests will have an ownership interest in the subsidiary's profits, dividend payments, and share capital and reserves.
• C) Under the entity concept, non-controlling interests will be shown as a liability.
• D) Under the proprietary concept, non-controlling interests will be shown as a liability.

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Definitions:

Incremental Borrowing Rate

The interest rate a company would have to pay if it borrows funds to finance a new project or purchase, used as a benchmark in calculating lease liabilities.

Equipment Lease

A contractual agreement where the owner of equipment allows another party to use the equipment for a specified period in exchange for payment.

Lease Rate

The cost of leasing a tangible or intangible asset, often expressed as a payment amount per period.

Implicit Rate

The interest rate implied by the lease payments in a leasing agreement, used in lease accounting to calculate the present value of lease payments.