The 12/31/2018 Balance Sheet of Despot Inc

question 133

Multiple Choice

The 12/31/2018 balance sheet of Despot Inc. included the following: In January 2018, Despot recorded a transaction with this journal entry:
- Despot declared a property dividend to give marketable equity securities to its common stockholders. The securities had cost Despot $7 million and currently have a fair value of $16 million. Which of the following would be included in recording the property dividend declaration?

• A) Increase in a liability for $16 million.
• B) Decrease in retained earnings for $7 million.
• C) Decrease in marketable securities by $16 million.
• D) All of these answer choices are correct.

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Definitions:

Variable Expenses

Costs that change in proportion to the level of activity or production volume.

Break-Even Sales

The amount of revenue needed to cover all fixed and variable costs, resulting in a net income of zero.

Retail Division

A segment of a company that directly sells products to consumers, typically involving activities and costs related to retail operations.

Segmented Income Statement

An income statement that breaks down revenues, cost of sales, and expenses by segments such as product lines, departments, or geographic regions.