Each Transaction Listed in 1 Through 4 Below Relates to a Long-Term

question 49

Essay

Each transaction listed in 1 through 4 below relates to a long-term investment is equity securities. Select the letters of the accounting effects (a through h) and place them in the space provided. Transactions may have more than one answer.
_____ 1. Using the equity method the market price of the investment increases above its cost.
_____ 2. Using the cost method the market price of the investment increases above its cost.
_____ 3. Using the equity method, the investee company recognizes a net loss for the year.
_____ 4. An investment in a 40%-owned subsidiary is sold for more than its carrying value.

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Definitions:

Preferred Values

The ideals or principles that are most important to an individual, group, or organization and guide behavior and decision making.

Influenced

The capacity to have an effect on the character, development, or behavior of someone or something.

High-context Cultures

Cultures in which communication relies heavily on implicit elements such as the context of the conversation and non-verbal cues.

Explicitly Spelled

Refers to something being stated or written in a clear and detailed manner, leaving no room for confusion or ambiguity.