Which of the Following Statements Is True About the Equity

question 23

Multiple Choice

Which of the following statements is true about the equity method of accounting?

• A)This method is used when the investor has no influence over the associate.
• B)This method is a condensed consolidation that shows the investor's share of the net assets and net income of the investee.
• C)This method record dividends from the associate as income from operations.
• D)This method has the same accounting impact as the amortized cost method.

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Definitions:

Operating Cash Flow

The cash flow stemming from a company's usual business processes.

Marginal Tax Rate

The proportion of your earnings that is taxed according to the tax bracket(s) for which you are eligible.

Straight-Line Depreciation

A method of calculating the depreciation of an asset that allocates an equal amount of depreciation each year over the asset's useful life.