What reporting basis should Wind Power Plus, a government business enterprise, use?
A)Cost method
B)Equity method
C)Modified equity method
D)Consolidation

Question

Quizplus · Accepted Answer

Wind Power Plus is a government business enterprise, which means it is expected to generate a profit and operate in a commercial manner. Therefore, it is reasonable to assume that the modified equity method would be the most appropriate reporting basis for Wind Power Plus. This method recognizes the government's investment in the enterprise as equity, and the government's share of profits and losses is recorded in the financial statements. It also ensures that the financial statements reflect the commercial reality of the enterprise while recognizing the government's influence over the enterprise.

What Reporting Basis Should Wind Power Plus, a Government Business