Which of the Following Results in a Decrease in the Equity

question 67

Multiple Choice

Which of the following results in a decrease in the Equity in Investee Income account when applying the equity method?

• A) Dividends paid by the investor.
• B) Net income of the investee.
• C) Unrealized gain on intra-entity inventory transfers for the current year.
• D) Unrealized gain on intra-entity inventory transfers for the prior year.
• E) Extraordinary gain of the investee.

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Definitions:

Cost Of Goods Manufactured

The total cost accumulated during the production of goods within a specified period, including labor, materials, and overhead expenses.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are considered variable costs.

Factory Depreciation

The systematic reduction in the recorded cost of fixed assets (such as manufacturing equipment) to account for wear and tear or obsolescence over time.

Total Manufacturing Costs

The aggregate cost of direct material, direct labor, and manufacturing overhead incurred in producing goods.