If the Equity Method Is Used to Account for an Investment

question 97

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)net income of the investee is ignored by the investor.
• C)net income of the investee is 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:

Alternative Hypothesis

The hypothesis that proposes there is a significant difference between two variables or that a parameter of the population has a value that contradicts the null hypothesis.

Simple Linear Regression

A statistical method for modeling the relationship between a dependent variable and one independent variable.

F Statistic

A ratio of variances that is used primarily in ANOVA to assess whether the variances between groups are significantly different.

Alternative Hypothesis

The hypothesis that proposes a significant difference, relationship, or effect, and is accepted if the null hypothesis is rejected.