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:

Material Quantity Variance

A financial measurement that calculates the difference between the expected amount of materials and the actual amount used, affecting production costs and efficiency.

Material Price Variance

The difference between the actual cost of materials used to produce a product and the standard or expected cost.

Direct Material Variances

The difference between the actual cost of direct materials used in production and the standard cost, indicating efficiency in using materials.

Favorable Variances

Variances that occur when actual costs are less than standard or budgeted costs, or actual revenues exceed expectations, benefiting the company's financial performance.