Which One of the Following Statements Is Correct for an Investor

question 40

Multiple Choice

Which one of the following statements is correct for an investor company?

• A)The balance in the Investment in Osprey Co.account can be reduced to represent a decline in the fair market value of the investment,but will not be adjusted if the fair market value increases.
• B)Under the equity method,the balance in the Investment in Osprey Co.account can be negative if the investee corporation operates at a loss.
• C)Once the balance in the Investment in Osprey Co.is reduced to zero,it will not be reduced any further.
• D)Under the equity method,the balance in the Investment in Osprey Co.account will increase when cash dividends are received.

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