QUESTION 19

Company A invested in Company B. The market value of company B has significantly declined in the current year and this trend is predicated to continue. Company A uses the equity-method and as controller would be acting ethically if you:

		do nothing and carry the investment at its original cost
		write down the investment temporarily and write it back up when the company improves in future years
		write down the investment to its market value and recognize a loss
		write down the investment to its market value but do not recognize a loss

5 points

QUESTION 20

You have just been hired by ABC Inc. and they are preparing consolidated statements. The company has had some difficult financial issues lately and they are looking to you to help them resolve their financial issues. You would be acting ethically if you:

		do not eliminate any intercompany transactions in the consolidation process
		do not eliminate any intercompany transactions in the consolidation process including unrealized intercompany profit
		eliminate all intercompany transactions in the consolidation process including the unrealized intercompany profit
		eliminate the intercompany transactions in the consolidation process but do not eliminate the unrealized intercompany profit since it is unrealized