Question #83

Reading: Reading 8 Intercorporate Investments

PDF File: Reading 8 Intercorporate Investments.pdf

Page: 37

Status: Unattempted

Part of Context Group: Q83-84 First in Group
Shared Context
- Haggs wonders which accounting method Simpson uses to calculate the book value of the BC investment for the year ending December 31, 1998. Which is the correct method? A) Investment in Financial Assets method. B) Equity method. C) Acquisition method.
Question
Haggs wonders which accounting method Simpson uses to calculate the book value of the BC investment for the year ending December 31, 2000. Which is the correct method?
Answer Choices:
A. Equity method
B. Acquisition method
C. Proportional consolidation method
Explanation
When a company's interest in another exceeds 50% it is considered to have controlling interest and must consolidate the financial statements.
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