When Equity Accounting Is Applied,how Is the Account Balance of the Investment

question 39

Multiple Choice

When equity accounting is applied,how is the account balance of the investment in the associate measured?

• A) At cost.
• B) At fair value.
• C) At cost initially, and thereafter at fir value.
• D) At cost plus adjustments for post-acquisition movements of profits and reserves.
• E) At fair value plus adjustments for post-acquisition movements of profits and reserves.

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Definitions:

Profits

The financial gain realized when the revenue from selling goods or services exceeds the costs of production.

Monopolized

Refers to a market structure where a single firm or entity controls a significant portion of the market share, reducing competition.

Consumer Surplus

Consumer Surplus is the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay.

Net Social Gain

The overall benefit to society, calculated by subtracting total social costs from total social benefits.