Which of the Following Observations Is Consistent with the Equity

question 19

Multiple Choice

Which of the following observations is consistent with the equity method of accounting?

• A) Dividends declared by the investee are treated as income by the investor.
• B) It is used when the investor lacks the ability to exercise significant influence over the investee.
• C) It may be used in place of consolidation.
• D) Its primary use is in reporting nonsubsidiary investments.

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Definitions:

Attitudes Influence

The impact that personal beliefs, feelings, and predispositions have on behavior and responses to various people, situations, or ideas.

Reasonably Stable

Describes a condition or situation that is not easily changed or likely to experience significant fluctuations, maintaining a predictable state over time.

Behavioral Tendencies

Predominant patterns or inclinations in behavior and response to certain stimuli or situations, often shaped by a mix of genetic, cultural, and personal factors.

Attitudes

A settled way of thinking or feeling about something that reflects an individual's beliefs, feelings, or tendencies towards an object or situation.