If the Equity Method Is Used to Account for an Investment

question 85

Multiple Choice

If the equity method is used to account for an investment in common shares

• A)it is presumed that the investor has no significant influence on the investee.
• B)profits of the investee are ignored by the investor.
• C)profits of the investee are recorded as realized gains, but dividends received are credited to the investment account.
• D)the investment account may be at times greater than the acquisition cost.

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Definitions:

Yugoslavia

A former country in Southeast Europe that existed from 1918 to 1992, known for its diverse culture and ethnicity.

Overhead Costs

Expenses associated with running a business that are not directly tied to a specific product or service, such as rent and utilities.

Contributing Factor

An element that plays a part in causing a situation or outcome.

Circumstantial Factor

An element or condition that affects a situation but is not a direct cause; often considered in evaluations or analysis of outcomes.