In 2017,Gigajoule Corporation Used the Equity Method to Account for a 25

question 36

Multiple Choice

In 2017,Gigajoule Corporation used the equity method to account for a 25% ownership interest in Megawatt Corporation.If Megawatt Corporation reports $400,000 of income and pays $80,000 of dividends in 2017,the net effect of the entries made by Gigajoule Corporation in 2017 will be to:

• A) reduce the Investment account by $320,000
• B) reduce the Investment account by $80,000
• C) increase the Investment account by $320,000
• D) increase the Investment account by $80,000

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Definitions:

Depreciated

The decrease in value of an asset over time, often due to wear and tear or obsolescence.

Purchase Price

The amount of money paid to buy something, including assets like real estate, securities, or goods.

Suggested Retail Price

The price a manufacturer recommends retailers to sell their product for to consumers.

Discount

A reduction in the price of a product or service, often to attract customers or to sell off excess stock.