A Jointly Controlled Entity

question 9

Multiple Choice

A jointly controlled entity:

• A) Should be accounted for using the cost method in the venturer's own books and using the equity method in the group accounts (if they are prepared).
• B) Should be accounted for using the net market method in the books of the venturer and also in the group accounts.
• C) Should be accounted for using the cost method in the venturer's own books and using the equity method in the group accounts, if they are prepared. Where group accounts are not prepared, the equity method should be applied in the venturer's own books.
• D) Should be accounted for using the net present value method in the group accounts and at cost in the venturer's own books.
• E) None of the given answers.

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Definitions:

Market Index

A metric that measures the performance of a basket of securities intended to represent a particular market or segment of it, like the S&P 500 or NASDAQ.

Treynor-Black Model

A portfolio optimization model that integrates market equilibrium theory with security selection to enhance portfolio performance.

Nonsystematic Risk

The risk associated with an individual asset or company, which can be reduced through diversification, unlike systematic risk.

Mispriced Securities

Financial instruments whose market prices deviate from their fair values due to various factors like information asymmetry or market inefficiencies.