Company P Company Uses the Equity Method to Account for Its

question 4

Multiple Choice

Company P Company uses the equity method to account for its January 1, 20X1, purchase of 30% of Company S's common stock.On January 1, 20X1, the market values of Company S's FIFO inventory and land exceed their book values.How do these excesses of market values over book values affect Company P's reported equity in Company S's 20X1 earnings? ​
Inventory Excess Land Excess

• A)Decrease Decrease
• B)​Decrease No effect
• C)​Increase Increase
• D)​Increase No effect

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Definitions:

Echolalia

Echolalia is the automatic repetition of vocalizations made by another person, often seen in developmental disorders like autism.

Stammering

A speech disorder characterized by involuntary repetitions and prolongations of sounds, syllables, or words.

Lisp

A speech impediment that affects the pronunciation of sibilants, causing them to be pronounced with a "th" sound.

Magical Thinking

The belief that one's thoughts, wishes, or desires can influence the physical world; common in children and certain psychiatric conditions.