Phast Corporation Owns a 80% Interest in Stechno Company,acquired Several

question 17

Multiple Choice

Phast Corporation owns a 80% interest in Stechno Company,acquired several years ago at a cost equal to book value and fair value.Stechno sells merchandise to Phast for the first time in 2011,and some is unsold at December 31,2011.In computing income from the investee for 2011 under the equity method,Phast uses which equation?

• A)80% of Stechno's income less 100% of the unrealized profit in Phast's ending inventory
• B)80% of Stechno's income plus 100% of the unrealized profit in Phast's ending inventory
• C)80% of Stechno's income less 80% of the unrealized profit in Phast's ending inventory
• D)80% of Stechno's income plus 80% of the unrealized profit in Phast's ending inventory

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Definitions:

DADA Syndrome

Four stages—denial, anger, depression, and acceptance—experienced by individuals when they are faced with unwanted change.

Denial

A psychological defense mechanism wherein an individual refuses to accept reality or facts.

Anger

A strong feeling of annoyance, displeasure, or hostility.

Lewin's Force Field Analysis

A conceptual framework for analyzing the factors (forces) that influence a situation, identifying those that support a particular goal (driving forces) and those that oppose it (restraining forces).