The Following Information Pertains to Questions

question 52

Multiple Choice

The following information pertains to questions
GNR Inc owns 100% of NMX Inc.During the year,NMX Inc earned a net income of $40,000 and paid Dividends of $10,000.
-Assuming that GNR Inc uses the Equity Method,what effect would the above information have on GNR's investment in NMX account?

• A)An increase of $30,000.
• B)An increase of $40,000.
• C)An increase of $10,000
• D)No effect.

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Definitions:

Imperfectly Competitive

Refers to market structures that do not meet the criteria of perfect competition, featuring elements like price makers, barriers to entry, and product differentiation.

Diminishing Returns

A principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.

Marginal Resource Cost

The additional cost incurred by employing one more unit of a resource.

Total Resource Cost

The total costs incurred for the production of goods and services, including all raw materials, labor, and overhead.