Jarrett Corporation Uses the Equity Method to Account for Its

question 20

Multiple Choice

Jarrett Corporation uses the equity method to account for its 25% investment in Polo Corporation and receives $15,000 in dividends. How should Jarrett account for these dividends?

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

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Definitions:

Current Liability

Short-term financial obligations that are due within one year or within a normal operating cycle.

Current Assets

Assets expected to be converted into cash, sold, or consumed within a year or within the operating cycle of a business.

Federal Unemployment Taxes

Taxes paid by employers to fund the federal government's oversight of the state unemployment insurance programs.

Gross Pay

The total earnings of an employee for a payroll period.