How Does the Partial Equity Method Differ from the Equity

question 77

Multiple Choice

How does the partial equity method differ from the equity method?

• A)in the total assets reported on the consolidated balance sheet.
• B)in the treatment of dividends.
• C)in the total liabilities reported on the consolidated balance sheet.
• D)Under the partial equity method,subsidiary income does not increase the balance in the parent's investment account.
• E)Under the partial equity method,the balance in the investment account is not decreased by amortization on allocations made in the acquisition of the subsidiary.

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Definitions:

Purchase Machinery

The acquisition of machines or equipment for the production of goods or services.

Discount Rate

This is the discount rate used in the process of discounted cash flow analysis to find out the current value of cash flows expected in the future.

Annual Cost Savings

The reduction in costs achieved during a fiscal year, often as a result of process improvements or cost-cutting measures.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows, used in capital budgeting to assess the profitability of an investment or project.