Which of the Following Statements Is Not Correct

question 14

Multiple Choice

Which of the following statements is not correct?

• A) Percentage of control is the term used to reflect the degree of dependency in which a parent company holds its subsidiaries or associates.
• B) The percentage of control is used to determine the consolidation method in establishing the consolidated financial statements.
• C) The percentage of control held by a parent is always equal to the percentage of interest it holds in a given subsidiary or associate.
• D) The percentage of interest is used in the process of consolidation of accounts and calculations to define majority and minority interests.

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Definitions:

Cost of Capital

The essential profit rate that companies need to hit on their investments to uphold their value in the market and attract capital.

Capital Budgeting

The process a business undertakes to evaluate and select long-term investments that are consistent with the firm's goal of wealth maximization.

Equity Financing

The method of raising capital by selling company shares to investors; in return, the investors receive ownership interests in the company.