A Company Has Been Using the Fair-Value Method to Account

question 39

Multiple Choice

A company has been using the fair-value method to account for its investment. The company now has the ability to significantly control the investee and the equity method has been deemed appropriate. Which of the following statements is true?

• A) A cumulative effect change in accounting principle must occur.
• B) A prospective change in accounting principle must occur.
• C) A retrospective change in accounting principle must occur.
• D) The investor will not receive future dividends from the investee.
• E) Future dividends will continue to be recorded as revenue.

---

Definitions:

Business-to-Business (B2B)

transactions or relations conducted directly between companies rather than between companies and individual consumers.

E-commerce

The buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet.

Credit Card Transactions

Financial operations where purchases are made or services paid for using a credit card.

Cell Phone Location

The determination or estimation of the geographical position of a mobile phone, often used for services such as emergency assistance or navigation.