Which One of the Following Is True of the Equity

question 25

Multiple Choice

Which one of the following is true of the equity method?

• A)The income recognized by the investor is based on the percentage of stock ownership and the amount of earnings reported by the investee.
• B)Market value adjustments are made at yearend.
• C)The receipt of dividends increases net income on the investor's financial statements.
• D)The percent of ownership must be greater than 50% to apply this method.

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Definitions:

State Governments

The governing bodies of individual states within a federal system, responsible for local legislation and administration.

McCulloch v. Maryland

A landmark Supreme Court case in 1819 that established the principles of federal supremacy and implied powers of the federal government.

Supremacy Clause

A provision in the U.S. Constitution stating that federal law takes precedence over state law.

Commerce Clause

A provision in the U.S. Constitution that grants Congress the power to regulate trade between states, with foreign nations, and with Native American tribes.