If the Equity Method Is Used to Account for an Investment

question 128

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 are ignored by the investor.
• C) net income 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.

---

Definitions:

Safety Standards

are established norms or criteria designed to ensure the safe design, production, use, and disposal of products and services.

Insurance Contracts

Agreements between an insurer and the insured, where the insurer agrees to compensate the insured for loss under specific circumstances in exchange for a premium.

Fire and Theft

Refers to a type of insurance coverage that protects against the specific losses of fire damage and theft.

Victims

Individuals who suffer harm as a result of criminal activity, negligence, or another wrongful action.