Client a Has Equity Interests in Several Affiliates

question 35

Multiple Choice

Client A has equity interests in several affiliates. In addition, Client A sits on the Board of Directors for Company B, one of the affiliates. If Client A decides to appoint his spouse as the managing director at Company B, then which of the following would be an example of a related-party transaction?

• A) Sales between Client A and all of its affiliates.
• B) Sales between Client A and Company B.
• C) Sales from Company B to another of Client A's affiliates.
• D) All of the above.

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Definitions:

Expected Activity

The projected level of activity or volume of work anticipated for a certain period, often used for planning and budgeting purposes.

Activity Rate

A measure used in activity-based costing to assign costs to activities based on their use of resources.

Batch Setup

The process of preparing equipment and machinery for a specific batch of production, including configuration and adjustments.