In Reference to Intercompany Transactions Between an Investor and an Investee,when

question 41

Multiple Choice

In reference to intercompany transactions between an investor and an investee,when the investor can significantly influence the investee,which of the following statements is correct,assuming that the investor is using the equity method?

• A)There is the presumption of arms-length bargaining between the related parties.
• B)As long as the investor recognizes the effects of the transaction in its financial statements,it is not required to provide any additional disclosures.
• C)In reporting its share of earnings and losses of an investee,the investor must eliminate the effect of profits and losses on the intercompany transactions until they are realized.
• D)None of the above is correct.

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Definitions:

Units

A measure of quantity used to express the amount of a product or service.

Unit Selling Price

The amount charged to the customer for a single unit of a product or service.

October Sales

Sales revenue generated during the month of October.

Units

In a business context, units refer to a measure of quantity, such as items produced, sold, or in inventory, used for operational and financial analyses.