Under the Equity Method, a Company Should Report an Unrealized

question 176

Multiple Choice

Under the equity method, a company should report an unrealized gain on a long-term investment:

• A) when the market price is greater than cost.
• B) when the market price is less than cost.
• C) if the investee stock has fallen below the investors cost.
• D) in no instance. No adjusting entry is made.

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Definitions:

Economists

Professionals who study the production, distribution, and consumption of goods and services, often focusing on research, analysis, and the development of economic theories.

Quality Changes

Alterations in the features, specifications, or performance of goods and services, often impacting their perceived value or utility.

Bureau of Labor Statistics

An agency of the United States Department of Labor, responsible for measuring labor market activity, working conditions, and price changes in the economy.

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used as an indicator of inflation.