Connector Corporation Invested in an Unincorporated Joint Venture and Elected

question 7

Multiple Choice

Connector Corporation invested in an unincorporated joint venture and elected to use pro rata consolidation in preparing its financial statements.Connector reported income of $120,000 from its separate operations and net income of $150,000 for the year ended December 31,20X8.The joint venture reported assets of $150,000 and liabilities of $60,000 on January 1,20X8,and assets of $240,000 and liabilities of $75,000 on December 31,20X8.It made no distributions to owners during the year.Connector reports total assets (excluding its investment in the unincorporated joint venture) of $550,000 at December 31,20X8.
-Based on the preceding information,Connector's total assets at the end of the year will be highest if it were able to use:

• A)pro rata consolidation.
• B)equity-method reporting.
• C)cost-method reporting.
• D)full consolidation.

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Definitions:

Desert Island

An uninhabited or deserted island, often depicted in literature and movies as a remote, isolated place.

Competitive Equilibrium

A market state where supply equals demand, and no economic agents have the incentive to change their behavior.

Utility Function

A mathematical representation of how a consumer ranks different bundles of goods according to the level of satisfaction or happiness they provide.

Endowed

Provided with a quality, ability, or asset; often used in the context of endowed chairs in academia or endowed grants/funds.