Which of These Is Not a Feature of the Pure

question 8

Multiple Choice

Which of these is not a feature of the pure equity accounting method?

• A) A proportionate share of dividends paid by the investee is debited to the bank account and credited to the investment account
• B) A proportionate change in after-tax profits of the investee is debited to the investment account and credited to share of net profit of associate
• C) A proportionate change in asset revaluations by the investee is debited to the investment account and credited to a revaluation reserve
• D) Any difference between the acquisition price and the amount at which the investment is initially recorded in the investor's accounts is recorded as goodwill

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Definitions:

Allowance for Doubtful Accounts

An estimation of the amount of accounts receivable that is not expected to be collected, used to create a more accurate picture of a company's financial health.

Allowance for Doubtful Accounts

A contra-asset account that represents estimates of receivables that may not be collectible.

Transactions and Events

Transactions refer to the economic activities that impact financial status, and events are occurrences that can affect the company's financial position.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time.