How Should a Permanent Loss in Value of an Investment

question 45

Multiple Choice

How should a permanent loss in value of an investment using the equity method be treated?

• A) The equity in investee income is reduced.
• B) A loss is reported in the same manner as a loss in value of other long-term assets.
• C) The investor's stockholders' equity is reduced.
• D) No adjustment is necessary.
• E) Record an offset to cash.

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Definitions:

Energy Conservation

The practice of reducing energy consumption through using less of an energy service and efficient energy usage.

Dishabituation

Increase in responsiveness after presentation of a new stimulus.

Habituation

The method through which a person becomes used to a stimulus by being exposed to it multiple times, resulting in a reduced reaction.

Perceptual Skills

Abilities related to the interpretation of sensory input, such as recognizing patterns, objects, and spatial relationships.