Assume the Initial Value Method Is Applied

question 113

Multiple Choice

Assume the initial value method is applied.How much equity income will Kaye report on its internal accounting records as a result of Fiore's operations?

• A) $400
• B) $300
• C) $380
• D) $100
• E) $210

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Definitions:

Pay Dividend

The action by a company to distribute a portion of its earnings to its shareholders, usually in the form of cash or additional stock.

Return on Equity

A financial ratio that measures the profitability of a business in relation to shareholders' equity.

Profit Margin

A financial ratio that shows the percentage of revenue remaining after all operating expenses, interest, taxes, and dividends have been deducted.

Return on Assets

A financial ratio indicating how efficiently a company is using its assets to generate earnings.