Which of the Following Results in an Increase in the Equity

question 61

Multiple Choice

Which of the following results in an increase in the Equity in Investee Income account when applying the equity method?

• A) Amortizations of purchase price over book value on date of purchase.
• B) Amortizations, since date of purchase, of purchase price over book value on date of purchase.
• C) Extraordinary gain of the investor.
• D) Unrealized gain on intra-entity inventory transfers for the prior year.
• E) Sale of a portion of the investment at a loss.

---

Definitions:

Controlling Account

A general ledger account that summarizes the total amounts listed in a subsidiary ledger.

Cash Payments Journal

A financial journal that records all cash payments made by a business, including expenses, asset purchases, and debt payments.

Sales Discounts

Refers to reductions from the listed price of goods or services, offered by sellers to buyers, typically as an incentive or reward.

Accounts Payable

Amounts a company owes to creditors for goods or services bought on credit.