Which Statement Is Correct About an Associate

question 94

Multiple Choice

Which statement is correct about an associate?

• A)An arrangement where one party has the power to participate in the financial and operating policy decisions of another entity.
• B)An arrangement where one entity governs the financial and operating policies about another entity.
• C)A contractual arrangement whereby two or more parties share control over an economic activity and all strategic decisions requires unanimous consent by all parties.
• D)An arrangement that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity.

Understand and apply the equity method for accounting for investments.

Prepare journal entries related to equity method investments including initial recognition, recognition of investee's net income or loss, and dividends received.

Calculate and defer gross profit on inter-entity inventory sales and recognize it appropriately in subsequent periods.

Determine the fair value of investments and adjustments for excess cost over book value attributable to specific intangible assets and goodwill.

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Definitions:

Receptive Vocabulary

The ability to understand words and language spoken or written by others.

Expressive Vocabulary

The set of words a person can actively use in speech or writing to express their thoughts and feelings.

Cooing

Early vocalization by infants that involves the production of soft, murmuring sounds, often expressing contentment or engaging in early communication.

Cooing

The early vocalization stage in infants, characterized by the production of soft, murmuring sounds, typically starting around 6 to 8 weeks of age.