Inca Company Reports Current E&P of Negative $100,000 in Year

question 89

Multiple Choice

Inca Company reports current E&P of negative $100,000 in year 1 and accumulated E&P at the beginning of the year of $200,000.Inca distributed $300,000 to its sole shareholder on January 1, year 1.How much of the distribution is treated as a dividend in year 1?

• A)$0.
• B)$100,000.
• C)$200,000.
• D)$300,000.

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Definitions:

Correlation Coefficient

A quantitative indicator that determines both the magnitude and orientation of a straight-line association between two variables represented on a scatter diagram.

Stock Returns

The gain or loss made on a stock, including dividends, over a specific period, expressed as a percentage of the investment's initial cost.

Efficient Market

A market hypothesis that states all available information is fully reflected in asset prices, implying that stocks always trade at their fair value, making it impossible to beat the market through expert stock selection or market timing.

Risk-Adjusted Returns

A measure of the return on an investment relative to the risk of that investment, often used to assess the performance of investment managers.