Under the Partial Equity Method of Accounting for an Investment

question 100

Multiple Choice

Under the partial equity method of accounting for an investment,

• A)The investment account remains at initial value.
• B)Dividends received are recorded as revenue.
• C)Amortization of the excess of fair value allocations over book value of net assets is applied over their useful lives to reduce the investment account.
• D)Amortization of the excess of fair value allocations over book value is ignored in regard to the investment account.
• E)Dividends received increase the investment account.

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Definitions:

Marginal Benefit

The incremental benefit or pleasure derived from consuming one more unit of a good or service.

Efficient Level

The level of output where a firm or economy is maximizing its productivity and minimizing waste within its resources.

Tax

An obligatory financial contribution or different kind of levy enforced on an individual or entity by a government agency for the purpose of funding government activities and diverse public costs.

Total Damage

The cumulative harm or loss resulting from an event or series of events, often used in the contexts of legal claims or environmental impacts.