Company a Owns 25% of the Voting Shares and Has

question 12

Multiple Choice

Company A owns 25% of the voting shares and has significant influence over Company B. Which method(s) of accounting for the investment in B might be permissible under Australian accounting standards?

• A)cost method
• B)equity method
• C)consolidation method
• D)cost method or equity method

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Definitions:

Net Income

The total profit of a company after subtracting all expenses, including taxes, from its total revenues.

IFRS Categories

Classifications under the International Financial Reporting Standards that dictate the presentation and disclosure of financial information in the financial statements.

Cash Flows

The sum of funds being moved in and out of a company, particularly influencing its ability to meet short-term obligations.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in any given jurisdiction.