If a Company Reporting Under ASPE Decides to Use the Cost

question 7

Multiple Choice

If a company reporting under ASPE decides to use the cost model to account for an investment in common shares, dividends received should be

• A) credited to the Investment account.
• B) credited to the Dividend Revenue account.
• C) debited to the Investment account.
• D) recorded only when 20% or more of the shares are owned.

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Definitions:

Applied to Production

Costs that are allocated or assigned to goods that are being produced, often involving direct labor, materials, and overhead.

Overapplied

Refers to a situation where the amount of overhead allocated to products or jobs is more than the actual overhead incurred.

Underapplied

Underapplied refers to a situation where the allocated costs are less than the actual costs incurred, often relating to overhead in manufacturing.

Direct Labor-Hours

A measure of the amount of time workers spend on production, often used as a basis for allocating overhead costs in traditional costing systems.