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:

Hedge Funds

Investment funds that use advanced strategies, including leverage, derivatives, and short selling, aiming for high returns.

Mutual Funds

Investment funds that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities.

Front-end Load

A fee charged to an investor at the time of their initial investment into a mutual fund, typically used for the fund's sales commission.

Expense Ratio

The measure of what it costs an investment company to operate a mutual fund, expressed as a percentage of the fund's assets.