When an Investor Uses the Equity Method to Account for Investments

question 59

Multiple Choice

When an investor uses the equity method to account for investments in common stock,the investment account will be increased when the investor recognizes

• A) a proportionate share of the net income of the investee.
• B) a cash dividend received from the investee.
• C) periodic amortization of an intangible arising from contractual rights acquired in the purchase.
• D) depreciation related to the excess of market value over book value of the investee's depreciable assets at the date of purchase by the investor.

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Definitions:

Missing Value

A term used in statistics and data analysis to describe data points or elements that are absent or not recorded.

Equivalent Financial Position

A state in which two or more financial scenarios provide the same economic value or utility to an investor or individual.

Focal Date

A specific date used as a reference point for calculations in financial transactions, especially in annuities and other periodic payments.

Maturity Value

The amount payable to an investor at the end of a fixed term investment, including the principal and any accrued interest.