Performance Evaluations Suffer from a Number of Problems

question 47

Multiple Choice

Performance evaluations suffer from a number of problems.The more significant of these problems include

• A)the fact that definitions are not clear.
• B)the halo effect.
• C)the central tendency phenomenon.
• D)all of these.

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Definitions:

Parent-Company Extension Method

An accounting method where the financial statements of the parent company include its investments in subsidiaries without consolidating their individual financial statements.

IFRS 3

An International Financial Reporting Standard that outlines the accounting requirements for business combinations.

Entity Method

A consolidation method wherein investments in subsidiaries are reported at cost and income from the investment is recognized to the extent of dividends received.

Subsidiary

A company that is controlled by another company, typically through ownership of more than half of its voting stock.