Olde Corp Accounts for Its Investment in the Common Shares of of Young

question 1

Multiple Choice

Olde Corp. accounts for its investment in the common shares of Young Inc. under the equity method. Olde Corp. should record a cash dividend received from Young as

• A) a reduction of the carrying value of the investment.
• B) additional paid-in capital.
• C) an addition to the carrying value of the investment.
• D) dividend income.

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Definitions:

Corporate Records

Documents and ledgers that are required to be maintained by a corporation, detailing its operations, financial status, and legal obligations.

Short-Form Merger

A merger between a subsidiary corporation and a parent corporation that owns at least 90 percent of the outstanding shares of each class of stock issued by the subsidiary corporation.

Acquisition

The act of obtaining control of another company or asset, typically through purchase or merger.

Corporation

A corporation is a legal entity that is separate and distinct from its owners, formed by a group of people or shareholders, and recognized as having rights and responsibilities similar to those of an individual.