A Subsidiary's Recorded Profits and Retained Earnings Must Be Adjusted

question 10

Multiple Choice

A subsidiary's recorded profits and retained earnings must be adjusted for unrealised profits prior to calculation of NCI allocation.The adjustments apply to:

• A) upstream transactions.
• B) downstream transactions.
• C) both upstream and downstream transactions.
• D) none of the above.

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Definitions:

Implied Novation

A legal concept where a new contract is assumed to replace an old one due to the actions or situations of the parties involved, without this being explicitly stated.

Actual Novation

The replacement of an existing obligation with a new one, extinguishing the original obligation and creating a new contract with different terms.

Buyout Price

The agreed amount for which an ownership interest in a business can be purchased outright.

Court Order

A formal instruction issued by a court that requires a person or entity to do or not do something.