(Multiple Choice)1. When an investor offers the equity strategy to account for investments in widespread stock, cash dividends got by the investor from the investee should be tape-recorded asa. A deduction from the investor’s share of the investee’s revenues.b. Dividfinish income.c. A deduction from the stockholders’ equity account, dividends to stockholders.d. A deduction from the investment account.2. Which of the complying with does not indicate an investor company’s capacity to considerably affect an investee?a. Material intra-entity transactions.b. The investor owns 30 percent of the investee however another owner holds the continuing to be 70 percent.c. Interreadjust of personnel.d. Technological dependency.3. Sisk Company kind of has owned 10 percent of Maust, Inc., for the past numerous years. This ownership did not allow Sisk to have actually substantial influence over Maust. Recently, Sisk acquired an additional 30 percent of Maust and now will certainly usage the equity approach. How will certainly the investor report this change?a. A cumulative impact of an accounting adjust is presented in the present earnings statement.b. No adjust is recorded; the equity technique is used from the day of the brand-new acquisition.c. A retrospective adjustment is made to restate all prior years presented using the equity method.d. Sisk has actually the choice to pick the technique to present this change.4. Under the fair-value option, which of the following affects the income the investor recognizes from its ownership of the investee?a. The investee’s reported income changed for excess cost over book worth amortizations.b. Changes in the fair worth of the investor’s ownership shares of the investee.c. Intra-entity earnings from upstream sales.d. Extraordinary items reported by the investee.5. When an investor elects the fair-worth choice for a far-ranging influence investment, cash dividends obtained by the investor from the investee must be recorded asa. A deduction from the investor’s share of the investee’s reported income.b. A deduction from the investment account.c. A reduction from gathered various other in-depth earnings reported in stockholders’ equity.d. Dividend revenue.6. Perez, Inc., uses the equity approach for its 25 percent investment in Senior, Inc. Throughout 2011, Perez sold goods via a 40 percent gross profit to Senior. Senior sold every one of these items in 2011. How must Perez report the result of the intra-entity sale on its 2011 earnings statement?a. Sales and price of goods sold must be diminished by the amount of intra-entity sales.b. Sales and also cost of items sold need to be diminished by 25 percent of the amount of intra-entity sales.c. Investment revenue must be reduced by 25 percent of the gross profit on the amount of intraentity sales.d. No adjustment is crucial.View Solution:Multiple Choice 1 When an investor offers the equity method




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Rohit Sanswered on November 03, 2020

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1. When an investor offers the equity method to account for investments in widespread stock, cash dividends got by the investor from the investee should be videotaped asa

Ans. A deduction from the investment account

2. Which of the adhering to does not indicate an investor company’s capability to considerably influence an investee?

Ans b. The investor owns 30 percent of the investee yet one more owner holds the staying 70...