There Are Two Difficulties That Arise in Understanding and Interpreting

question 84

Multiple Choice

There are two difficulties that arise in understanding and interpreting the income statements.One is the disagreements about what exactly should be reported as revenues and the other is

• A)whether to report the revenues.
• B)what should be considered as expenses.
• C)disputes over when to recognize revenues.
• D)the preferable tax rate to incorporate.

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Definitions:

Equity Method

The equity method is a type of accounting used for investments, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the net assets of the investee.

Noncontrolling Interest

The portion of equity (ownership) interest in a subsidiary not attributable to the parent company.

Intra-Entity Asset Transfers

Transactions involving the transfer of assets between divisions or units within the same company.