Mallard Ltd

question 22

Multiple Choice

Mallard Ltd. acquired 75% of the outstanding common shares of Teal Ltd. at December 31, 20X1, for $900,000. Mallard has recorded its investment using the cost method.
- In 2008, Teal paid out dividends of $100,000. In preparing Mallard's consolidated financial statements, what elimination is required for the dividends?

• A)Reduce dividends declared by $75,000; reduce dividend income by $75,000.
• B)Reduce dividends declared by $100,000; reduce dividend income by $100,000.
• C)Reduce dividends declared by $100,000; reduce dividend income by $75,000; reduce non-controlling interest by $25,000.
• D)Reduce dividend declared by $100,000; reduce dividend income by $75,000; increase non-controlling interest by $25,000.

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Definitions:

Short-Run Phillips Curve

A curve illustrating an inverse relationship between the rate of inflation and the rate of unemployment in the short term.

Disinflation

A decrease in the rate of inflation, indicating a slowdown in the rate at which prices for goods and services rise.

Financial Crisis

A situation where financial assets suddenly lose a large part of their nominal value, often leading to bankruptcies, bank failures, and economic downturns.

Price Level

A measure of the average prices of goods and services in an economy, indicating inflationary trends and purchasing power.