The Direct Allocation Method Does Not Allocate Support Department Costs

question 108

True/False

The direct allocation method does not allocate support department costs to other support departments.

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is represented as the investor's share of the associate's net assets, and the investor's income statement reflects their share of the associate's profits or losses.

Voting Shares

Shares of a company that grant the shareholder the right to vote on company matters.

Patent

An exclusive right granted for an invention, which allows the patent owner to exclude others from making, using, or selling the invention for a certain period of time.

Non-controlling Interest

Equity interest in a subsidiary not held by the parent company, representing a share of the subsidiary’s net assets and profits.