Under the Equity Method,if the Investee Company Has a Net

question 131

Multiple Choice

Under the equity method,if the investee company has a net loss,then the investor company will:

• A)debit the Equity-Method Investment account for their share of the net loss.
• B)credit the Unrealized Loss on Equity-Method Investment account for their share of the net loss.
• C)credit the Equity-Method Investment account for their share of the net loss.
• D)debit the Unrealized Loss on Equity-Method Investment.

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Definitions:

Treasury Stock

Treasury Stock represents shares that were issued and subsequently repurchased by the company, reducing the amount of outstanding stock on the open market.

Common Stock

A type of security that represents ownership in a corporation, granting holders voting rights and a share in the company’s profits via dividends.

Treasury Shares

Shares that were once part of the circulating supply of stock but were subsequently reacquired by the issuing company, reducing the amount of outstanding stock on the open market.

Financing Activities

Processes that involve the flow of cash between a company and its owners and creditors, affecting the equity and debt of the business.