Minority, Passive Investments Are Initially Recorded at the

question 4

Multiple Choice

Minority, passive investments are initially recorded at the

• A)acquisition cost.
• B)fair market value of the net assets.
• C)lower of cost or market.
• D)present value of future cash flows.
• E)future value of present cash flows.

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Definitions:

Total Assets

The sum of all assets owned by an entity, as recorded on the balance sheet, representing the resources controlled by the entity.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period, ensuring compliance with the accrual basis of accounting.

Allowances for Doubtful Accounts

A contra-asset account that reduces the total amount of accounts receivable to reflect the portion that is estimated not to be collected.

Net Realizable Value

The estimated selling price in the ordinary course of business, minus the estimated costs of completion and the costs necessary to make the sale.