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:

Memorization

The process of committing something to memory or learning it by heart.

Hindsight Bias

The inclination to think, following an event, that one could have foreseen or anticipated the result, commonly called the "I-knew-it-all-along" effect.

Spontaneous Recovery

The reappearance of a conditioned response after a period of apparent extinction or reduction.

Repressed Memories

Remembrances that have been involuntarily repressed, connected to severe stress or distressing experiences.