Which of the Following Statements Is Correct

question 7

Multiple Choice

Which of the following statements is correct?

• A)The best NCI fair value measure might be the share price of the subsidiary at control date applied to the number of NCI shares but this would depend on any share trading in the subsidiary being liquid and active
• B)If shares in a subsidiary are obtained by an exchange of equity, and there is no active liquid market for the subsidiary's shares, then the best available NCI fair value measure would be the quoted price of the parent's shares, applied to the NCI shares as if they had been obtained by the parent
• C)If the shares in a subsidiary are obtained for cash 'privately', and there is no active liquid market for the subsidiary's shares, the estimate of the control date fair value of NCI becomes very subjective
• D)All of the above statements are correct

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Definitions:

Interest-Bearing Note

This is a debt instrument that pays interest to the holder at a fixed or variable rate until the maturity date or repayment of the principal amount.

Contingent Liabilities

Potential obligations that may arise depending on the outcome of a future event.

IFRS

International Financial Reporting Standards, which are accounting rules set by the International Accounting Standards Board (IASB) for the preparation of financial statements globally.

GAAP

Stands for Generally Accepted Accounting Principles, which are a common set of accounting rules and standards used in the United States.