A Company Using the Equity Method to Account for Long-Term

question 138

Multiple Choice

A company using the equity method to account for long-term investments should report an unrealized gain on the investment:

• A)if the investee stock has fallen below or risen above its cost to the investor.
• B)only if market exceeds cost.
• C)only if market is below cost.
• D)in no instance. No adjusting entry is made.

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Definitions:

Motivation

The internal or external forces that stimulate desire and energy in people to be continually interested and committed to a role, job, or subject, or to make an effort to attain a goal.

Glucose

A simple sugar that is an important energy source in living organisms and is a component of many carbohydrates.

Continuation Therapy

A phase of psychiatric treatment aimed at preventing relapse following acute response, extending over weeks to months.

Maintenance Therapy

Ongoing treatment to prevent the recurrence of disease or to prevent a disease from spreading further.