Frey Ltd Acquired 70% of Sabo Ltd

question 4

Multiple Choice

Frey Ltd. acquired 70% of Sabo Ltd. in 20X4. On January 1, 20X8, Frey acquired another 10% of Sabo's common shares for $250,000.
- With respect to this addition purchase, which of the following is true?

• A)On the consolidated statement of financial position, the goodwill balance will increase.
• B)On the consolidated statement of financial position, the common shares balance will increase.
• C)Frey must use the equity method to report the additional investment.
• D)Frey should ignore any changes in the fair values of Sabo's net assets between January 1, 20X4, and January 1, 20X8.

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Definitions:

Positive Punishment

The addition of an unpleasant stimulus to decrease the likelihood of a behavior's recurrence.

Negative Punishment

A behavior modification technique where a desirable stimulus is removed following an unwanted behavior, with the aim of decreasing that behavior in the future.

Stimulus Generalization

A psychological phenomenon in which a response to a specific stimulus becomes associated with similar stimuli, leading to the same response to the similar stimuli.

Secondary Reinforcer

A stimulus that has become reinforcing through its association with a primary reinforcer, often used in behavioral training and conditioning.