What Should an Investment in a Debt Investment Be Classified

question 89

Multiple Choice

What should an investment in a debt investment be classified as when management has not specifically identified the classification? That is to say, in the absence of an election, what is the default category?

• A)Associate.
• B)Amortized cost
• C)At fair value through OCI.
• D)At fair value through profit or loss.

Apprehend the principles behind disaggregated financial information and its significance for financial analysis.

Understand the criteria for inclusion of subsidiaries in a consolidated income tax return.

Calculate percentage ownership and its impact on income attribution.

Recognize and account for the investment of a subsidiary in its parent company.

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Definitions:

Tax Planning

The analysis and arrangements of a financial situation or business to minimize tax liability.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) for international use.

Deferred Taxes

Taxes that are incurred in one period but are not paid until a future period, often due to timing differences between accounting and tax reporting.

Taxable Entity

A business or individual that is required to pay taxes to a federal, state, or local government.