When an Investor Appropriately Applies the Equity Method, How Should

question 66

Multiple Choice

When an investor appropriately applies the equity method, how should it account for any investee Other Comprehensive Income (OCI) ?

• A) Under the equity method, the investor only recognizes its share of investee's income from continuing operations.
• B) The OCI would reduce the investment.
• C) The OCI would increase the investment.
• D) The OCI would not appear on the investor's income statement but would be a component of comprehensive income.
• E) The OCI would be ignored but shown in the investor's notes to the financial statements.

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Definitions:

Discriminative Stimulus

A stimulus in the presence of which a particular response is reinforced, helping to differentiate it from other stimuli where the response would not be reinforced.

Operant Conditioning

A learning process in which the likelihood of a behavior is increased or decreased through reinforcement or punishment.

Reinforcement

A process in behavioral psychology that increases the likelihood of a behavior being repeated, through positive or negative stimuli.

Discriminative Stimulus

A stimulus in the environment that increases the probability of a particular behavioral response due to its association with a reinforcement or punishment.