CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Under both the equity method and the proportionate consolidation method:

I. The total sales and expenses are identical.
II. The total net assets are identical.
III. The total assets and liabilities are identical.
IV. The ratio analysis can be different.
Correct Answer: II and IV

I is false. The total income recognized is identical but not the total sales and expenses.
III is false for a similar reason.

User Contributed Comments 4

User Comment
Clint Is this question right? II appears wrong.
pranit II is correct. Total net assets is shareholder's equity, which is identical under both methods.
actiger Net assets = total assets - liability?
aravinda Total net assets is also know as "net worth, share holder's equity OR owner's equity"...

Total net worth = Total assets - total liability

It is usually comprised of "capital stock + retained earnings" either methods (equity or proportionate consolidation), the net worth is same.
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