Taguchi Ltd $$\begin{array} { | c | c | } \hline \text { DR Dividend income } & 30,000 \\\hline \text { CR Dividends declared } & 80,000 \\\hline\end{array}$$

question 34

Multiple Choice

Taguchi Ltd. owns 80% of Shag Co. Shag declared and paid $100,000 in dividends. Taguchi uses the cost method to record its investment in Shag. In preparing Taguchi's consolidated financial statements, what elimination entry must be made with respect to the dividends?

• A) \[\begin{array} { | c | c | }
• \hline \text { DR Dividend income } & 30,000 \\
• \hline \text { CR Dividends declared } & 80,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { DR Dividend income } & 30,000 \\
• \hline \text { DR Non-controlling interest } & 20,000 \\
• \hline \text { CR Dividends declared } & 100,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | c | }
• \hline \text { DR Non-controlling interest } & 20,000 \\
• \hline \text { CR Dividends declared } & 20,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | c | }
• \hline \text { DR Dividend income } & 100,000 \\
• \hline \text { CR Dividends declared } & 100,000 \\
• \hline
• \end{array}\]

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Definitions:

Departmental Factory Overhead Rate

A rate used to allocate indirect manufacturing costs to different departments within a factory.

Direct Labor Hours

The total time workers spend producing goods or providing services that can be directly attributed to a specific product or service.

Cutting and Sewing

The process involved in the making of garments, which includes the cutting of fabric according to patterns and sewing them together to create clothing.

Activity-based Costing

A method of accounting that assigns costs to specific activities based on their use of resources, providing more accurate product costing.