In Order to Purchase a Home, a Family Borrows $86,000

question 28

Multiple Choice

In order to purchase a home, a family borrows $86,000 to be paid back over a 25-year period in equal monthly payments. What percentage of the first monthly payment goes toward the principal
If the annual interest rate is 8%? If the annual interest rate is 12%?

• A)12.7%; 6.1%
• B)14.1%; 5.9%
• C)86.4%; 94.9%
• D)13.6%; 5.1%

Learn the treatment of Other Comprehensive Income (OCI) in relation to equity method investments.

Understand how to adjust the investment account balance for changes in ownership percentage, including acquisition costs, fair value adjustments, and amortization of excess cost over book value.

Understand the accounting for sales of investment in shares under the equity method, including gain/loss calculation and adjustments to the investment account.

Comprehend how a company's share of cumulative losses affects accounting for its investment under the equity method.

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Definitions:

Rational Emotive Therapy

A form of cognitive-behavioral therapy focusing on identifying irrational beliefs, challenging these beliefs, and finally reinterpreting them in a more rational light.

Aversion Therapy

A behavioral therapy technique where undesirable behaviors are discouraged through the use of unpleasant stimuli.

Social Skills Training

A behavioral therapy used to improve interpersonal skills through the use of modeling, role-playing, and reinforcement techniques.

Past Conditioning

The influence of previous learning experiences on an individual's current behavior or reactions.