Given the Differences That Are Likely to Exist Between Parent

question 11

Multiple Choice

Given the differences that are likely to exist between parent and project cash flows,the relevant cash flows to use in project evaluation are the

• A)incremental worldwide cash flows received by the parent
• B)incremental worldwide project cash flows
• C)incremental worldwide project cash flows that can be repatriated to the parent
• D)total worldwide cash flows generated by the project

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Definitions:

Equity Method

is an accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the investee's net profit or loss.

Share Capital

The major account reflecting contributed capital.

Retained Earnings

Profits that a company has elected to keep at the end of a fiscal period instead of distributing to shareholders as dividends, often used for reinvestment.

Incremental Adjustment

A modification made to accounts or values in small stages, often used for accounting adjustments or to refine estimates.