When Applying the Equity Method, How Is the Excess of Cost

question 80

Multiple Choice

When applying the equity method, how is the excess of cost over book value accounted for?

• A) The excess is allocated to the difference between fair value and book value multiplied by the percent ownership of current assets.
• B) The excess is allocated to the difference between fair value and book value multiplied by the percent ownership of total assets.
• C) The excess is allocated to the difference between fair value and book value multiplied by the percent ownership of net assets.
• D) The excess is allocated to goodwill.
• E) The excess is ignored.

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Definitions:

Alfred Kinsey

A biologist and sexologist known for his research into human sexuality and for developing the Kinsey scale, which measures sexual orientation.

Sexual Attitudes

Beliefs, feelings, and values regarding sexuality, sexual behavior, and sexual orientations.

Sexual Response Cycle

The sequence of physical and emotional changes that occur as a person becomes sexually aroused and participates in sexually stimulating activities, including plateau, orgasm, and resolution phases.

Inhibition

The psychological process of restraining or suppressing a thought, impulse, or action.