When the Cost Method Is Used to Account for an Investment

question 45

Multiple Choice

When the cost method is used to account for an investment, the carrying value of the investment is affected by

• A) the dividend distributions of the investee
• B) the periodic net income of the investee
• C) the earnings and dividend distributions of the investee
• D) neither the earnings nor the dividends of the investee

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Definitions:

Internet Search Industry

A sector of the economy that involves companies which provide technologies and services for searching information on the Internet.

Product Differentiation

The process of distinguishing a product or service from others in the market to make it more attractive to a targeted audience.

Elasticity

A determination of how the need or provision of a product varies in reaction to changes in its price.

Demand Curve

A graph showing the relationship between the price of a good and the amount of the good that consumers are willing and able to purchase, ceteris paribus.