When a Parent Entity Has Previously Held an Investment in a Subsidiary

question 22

Multiple Choice

When a parent entity has previously held an investment in a subsidiary prior to gaining control the effect on the consolidation process is as follows:

• A)there is no impact
• B)the change in the fair value of the previously held interest is recognised in profit or loss
• C)the change in the fair value of the previously held interest is recognised in retained earnings
• D)the change in the fair value of the previously held interest is recognised in other comprehensive income

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Definitions:

Optimistic Evaluation

The tendency to assess situations, challenges, or opportunities in a positive light, expecting favorable outcomes.

Synergy

The interaction or cooperation of two or more organizations, substances, or agents to produce a combined effect greater than the sum of their separate effects.

Employee Involvement

Refers to practices and methods that empower employees to participate in decisions that affect their jobs and the overall direction of the organization.

Committed

Being dedicated or loyal to a cause, activity, or task, often demonstrating a willingness to give time and energy to something believed in.