Cucumber Company Concluded at the Beginning of 2013 That the Company's

question 104

Multiple Choice

Cucumber Company concluded at the beginning of 2013 that the company's ownership interest in PickelCo had decreased to the point that it became appropriate to begin accounting for its investment as available for sale, rather than using the equity method as it had been doing. The balance in the investment account is $75,000 at the time of the change, and accountants working with company records determined that the balance would have been $50,000 if the investment had been accounted for as an available-for-sale investment. At the time of implementing the change to the available-for-sale method, if financial statements were prepared:

• A)Net income and retained earnings will be lower by $25,000.
• B)Net income will be unchanged, and retained earnings will be lower by $25,000.
• C)The accounts will be unchanged, because no adjustment is necessary.
• D)Other comprehensive income and accumulated other comprehensive income will be lower by $25,000.

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Definitions:

Innovation

the introduction of new ideas, products, services, or processes that improve upon the existing state of art or knowledge.

Haptics

The study and use of touch communication, including how people perceive and convey messages through physical contact.

Nonverbal

Communication that occurs without words, using gestures, facial expressions, body language, and other visual cues to convey messages.

Personal Contact

Refers to direct face-to-face interaction or communication between individuals.