Foster Corporation Uses the Equity Method to Account for Its

question 25

Multiple Choice

Foster Corporation uses the equity method to account for its 25% investment in Vector Corporation and receives $25,000 in dividends. How should Foster account for these dividends?

• A)An increase in assets.
• B)An increase in income.
• C)A decrease in the investment.
• D)A decrease in income.

---

Definitions:

Foreign Portfolio Investment

Investments in foreign countries' securities, such as stocks and bonds, without control over the management of those entities.

Net Capital Outflow

The difference between a nation's savings and its investment, representing the amount of domestic capital invested abroad minus the foreign capital invested domestically.

Pound Sterlings

The official currency of the United Kingdom, commonly known as the pound and denoted by GBP, which is one of the world's major currencies.

Bonds

Debt securities issued by entities such as governments or corporations to finance projects or operations, with the promise to repay the principal along with interest.