In 1997 CSX Successfully Purchased a Significant Share of Conrail

question 43

Multiple Choice

In 1997 CSX successfully purchased a significant share of Conrail. Immediately after the first offer was announced and the acquisition eventually consummated, the price of CSX fell below preacquisition levels and took many years to recover. This may be an example of ________.

• A) loss aversion
• B) mental accounting
• C) overreaction
• D) managerial overconfidence

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Definitions:

IAS 41

An international accounting standard that relates to agriculture, covering the accounting for agricultural activity and the management of living plants and animals.

Agricultural Produce

The harvested product of the entity’s biological assets.

Biological Assets

Living plants or animals that are used in agricultural production or held for sale, breeding, or other purposes, which can provide economic benefits to their owners.

AASB 141

An Australian accounting standard that covers the agricultural sector, detailing the accounting for agricultural activity including the recognition and measurement of biological assets and agricultural produce.