With the Equity Method, the Investor Recognizes Its Share of the Earnings

question 94

Multiple Choice

With the equity method, the investor recognizes its share of the earnings of the subsidiary when the

• A)investor sells the investment
• B)investee pays a cash dividend
• C)investee declares a cash dividend
• D)investee reports earnings on its income statement

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Definitions:

Mere Exposure Effect

A psychological phenomenon by which people tend to develop a preference for things merely because they are familiar with them.

Cognitive Dissonance

The mental discomfort experienced by a person who holds two or more contradictory beliefs, ideas, or values at the same time.

Explicit Attitudes

Attitudes that are consciously acknowledged and easily reported by the individual.

Stereotype

A fixed, oversimplified, and often inaccurate idea of the characteristics that typify a person or group, leading to prejudiced attitudes and actions.