A Company Has Been Using the Equity Method to Account

question 37

Multiple Choice

A company has been using the equity method to account for its investment. The company sells shares and does not continue to have significant influence. Which of the following statements is true?

• A) A cumulative effect change in accounting principle must occur.
• B) A prospective change in accounting principle must occur.
• C) A retrospective change in accounting principle must occur.
• D) The investor will not receive future dividends from the investee.
• E) Future dividends will continue to reduce the investment account.

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Definitions:

Psychological Factors

Mental processes and emotional states that influence an individual's behavior, perceptions, and overall health.

Immune System

The body's defense mechanism against foreign substances, infections, and diseases.

Optimist

An individual who tends to maintain a hopeful and positive outlook on life and its challenges.