For Each of the Following Numbered Situations Below, Select the Best

question 31

Essay

For each of the following numbered situations below, select the best letter answer concerning accounting for investments:
(A) Increase the investment account.
(B) Decrease the investment account.
(C) Increase dividend revenue.
(D) No adjustment necessary.
(1.) Income reported by 40% owned investee.
(2.) Income reported by 10% owned investee.
(3.) Loss reported by 40% owned investee.
(4.) Loss reported by 10% investee.
(5.) Change from fair-value method to equity method.Prior income exceeded dividends.
(6.) Change from fair-value method to equity method.Prior income was less than dividends.
(7.) Change from equity method to fair-value method.Prior income exceeded dividends.
(8.) Change from equity method to fair-value method.Prior income was less than dividends.
(9.) Dividends received from 40% investee.
(10.) Dividends received from 10% investee.
(11.) Purchase of additional shares of investee.
(12.) Investor's share of gross profit from intra-entity inventory sales when using the equity method.

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Definitions:

Actual Costs

The true amount of money spent on a project or activity, as opposed to estimated or budgeted costs.

Standard Costs

Standard costs are predetermined estimates of the cost to manufacture a single unit or a number of units of a product during a specific time period.

Variance Standard

A method used in budgeting and accounting to analyze the difference between planned financial outcomes and actual results.

Quantity Standard

A predetermined benchmark of the amount of input that should be used in the production of goods or services.