Which Statement Is Not Correct About the Equity Method

question 120

Multiple Choice

Which statement is not correct about the equity method?

• A)The investment account on the balance sheet equals the original cost plus the investor's share of the investee's post-acquisition changes in net assets.
• B)This method results in reflecting two legal entities as one economic unit for financial reporting purposes.
• C)Income is recognized equal to the investor's share of the investee's net income.
• D)Dividends from the investee are deducted from the investor's investment account.

Recognize the role and responsibility of different departments in variance analysis and standard cost setting.

Differentiate between various types of standards such as ideal, normal, and tight standards.

Understand how standard costs contribute to management planning, control, and decision making.

Comprehend the implications of setting standards on employee motivation and performance.

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Definitions:

Franchise Percentage

The portion of revenues or profits given to a franchisor by a franchisee as a contractual payment for being part of the franchisor’s system.

Personnel Training

The process of providing employees with the necessary skills and knowledge to perform their jobs effectively.

Operational Standards

Established criteria or guidelines that dictate the processes and procedures for achieving efficient, effective, and safe operational performance.

Franchisee Control

Franchisee control involves the governance and regulatory measures that a franchisee must adhere to as set by the franchisor, often detailed in the franchise agreement.