Photo Finish Corporation Bought a 40% Interest in Click-It Corporation's

question 74

Multiple Choice

Photo Finish Corporation bought a 40% interest in Click-It Corporation's $1 par value voting common stock on March 31,2019.On December 31,2019,Click-It paid a $1 million cash dividend declared earlier in 2019,and reported net income for the year ended 2019 of $10 million.On December 31,2019,Click-It's stock was trading at $11.50 per share. What effect will the dividend have on the Photo Finish financial statements?

• A)It would increase cash and increase equity in investee earnings.
• B)It would increase cash and decrease the investment account.
• C)It would increase cash and increase net unrealized gains/losses.
• D)It would increase cash and increase the investment account.

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Definitions:

Impulsive

Acting on spontaneous desires and urges without considering the consequences or the rationale behind the action.

Borderline Personality Disorder

A mental health disorder characterized by pervasive instability in moods, interpersonal relationships, self-image, and behavior.

Emotional Instability

Variability and unpredictability in emotional experiences and expressions, often a characteristic of certain personality disorders.

Impulse Control

The ability to resist or delay an impulse, drive, or temptation to act and is related to self-regulation.