Which of the Following Is True Concerning the Accounting for a Foreign

question 18

Multiple Choice

Which of the following is true concerning the accounting for a foreign investment under the cost method?

• A)Investment income is translated at the exchange rate on the dividend declaration date.
• B)​Investment income is translated using the average exchange rate for the year.
• C)​Investment income is based on the investee's net income adjusted for the excess of purchase price over book value.
• D)​Investment income is based on the investee's net income without adjusting for the excess of purchase price over book value.

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Definitions:

Honesty

A moral character trait that entails being truthful, trustworthy, and sincere in one's thoughts, speech, and actions.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another. The obligated party is typically someone entrusted with the care of money or property, like a trustee or legal guardian.

Legal Obligation

A duty enforced by law, requiring an individual or organization to follow or avoid a particular course of action.

Moral

Pertaining to the principles of right and wrong behavior and the goodness or badness of human character.