In a Noncash Purchase of a Controlling Interest in a Firm

question 3

Multiple Choice

In a noncash purchase of a controlling interest in a firm, disclosure is required on the consolidated statement of cash flows as a(n)

• A)​financing activity only.
• B)​financing activity and in the schedule of noncash financing and investing activity.
• C)​investing activity only.
• D)​investing activity and in the schedule of noncash financing and investing activity.

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Definitions:

Automated Shaper

A machine tool that uses computer control to shape or cut materials with precision, often used in manufacturing.

Gross Margin

The difference between sales revenue and the cost of goods sold before deduction of selling, general, and administrative expenses.

Job-Order Costing

A costing method that accumulates costs based on individual jobs or orders, suitable for businesses producing unique or custom products.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to individual jobs or products based on a consistent basis such as labor hours or machine hours.