ABC Owns a 35 Percent Interest in the Voting Common

question 4

Multiple Choice

ABC owns a 35 percent interest in the voting common of XYZ and uses the equity method.For 2013,XYZ reported income of $120,000 and declared cash dividends of $40,000.If the carrying value of XYZ investment was $290,000 on January 1,2013,ABC should (a) recognize investment revenue for 2013,and (b) report the carrying value of the investment,as follows:

• A)Choice 1
• B)Choice 2
• C)Choice 3
• D)Choice 4

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Definitions:

Imperfect Competitor

An imperfect competitor is a market participant that does not meet the conditions of perfect competition, often having some control over the price of its products due to a lack of numerous competitors or product differentiation.

Perfect Competitor

A theoretical firm in a perfectly competitive market that cannot influence the market price and accepts the price as given.

Output

Denotes the total quantity of goods or services produced by a company, industry, or economy within a specific period.

Resource

An asset or material that can be used to produce goods or services and provide economic benefit.