When the Cost Method Is Used to Account for an Investment

question 45

Multiple Choice

When the cost method is used to account for an investment, the carrying value of the investment is affected by

• A) the dividend distributions of the investee
• B) the periodic net income of the investee
• C) the earnings and dividend distributions of the investee
• D) neither the earnings nor the dividends of the investee

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Definitions:

Linear Regression

A statistical method that models the relationship between a dependent variable and one or more independent variables by fitting a linear equation to observed data.

F Test

A statistical test used to determine whether there are significant differences between the variances of two or more groups.

T Test

A statistical test used to determine if there is a significant difference between the means of two groups, which may be related in certain features.

Least Squares Line

A regression line calculated using the least squares method, aiming to minimize the squares of the differences between observed and predicted values.