A Change from the Cost Method to the Equity Method

question 21

Multiple Choice

A change from the cost method to the equity method of accounting for an investment in common stock resulting from an increase in the number of shares held by the investor requires:

• A) only a footnote disclosure.
• B) that the cumulative amount of the change be shown as a line item on the income statement, net of tax.
• C) that the change be accounted for as an unrealized gain included in other comprehensive income.
• D) retroactive restatement as if the investor always had used the equity method.

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Definitions:

Existential Therapy

A form of psychotherapy that emphasizes personal responsibility and the freedom to shape one's life, focusing on the individual's experience in the present moment.

Placebo Effect

A psychological and physiological response where individuals experience a perceived improvement in their condition solely because they believe they are receiving treatment.

Authenticity

The quality of being genuine or true to one's own personality, spirit, or character, often considered vital for mental health and personal growth.

Behavioral Perspective

A psychological approach that emphasizes the study of observable behaviors and the effects of learning and environment on an individual's actions.