Student name:__________
1) For each of the following numbered situations below, select the best letter answer
concerning accounting for investments:(A)
... [Show More] Increase the investment account.(B) Decrease the
investment account.(C) Increase dividend revenue.(D) No adjustment necessary.(1.) Income
reported by 40% owned investee.(2.) Income reported by 10% owned investee.(3.) Loss reported
by 40% owned investee.(4.) Loss reported by 10% investee.(5.) Change from fair-value method
to equity method. Prior income exceeded dividends.(6.) Change from fair-value method to equity
method. Prior income was less than dividends.(7.) Change from equity method to fair-value
method. Prior income exceeded dividends.(8.) Change from equity method to fair-value method.
Prior income was less than dividends.(9.) Dividends received from 40% investee.(10.) Dividends
received from 10% investee.(11.) Purchase of additional shares of investee.(12.) Investor’s share
of gross profit from intra-entity inventory sales when using the equity method.
Question Details
Accessibility : Keyboard Navigation
AICPA : BB Critical Thinking
AICPA : FN Measurement
Learning Objective : 01-02 Describe in general the various methods of accounting for an investment in
Learning Objective : 01-03 Identify the sole criterion for applying the equity method of accounting a
Learning Objective : 01-04 Describe the financial reporting for equity method investments and prepare
Learning Objective : 01-06d Understand the financial reporting consequences for sales of equity metho
Learning Objective : 01-06a Understand the financial reporting consequences for a change to the equit
Bloom's : Analyze
Learning Objective : 01-07 Describe the rationale and computations to defer the investor's share of g
Gradable : manual
Difficulty : 3 Hard
AACSB : Analytical Thinking
Topic : Report Change to Equity Method
Topic : Report Sale of Equity Investment
Accessibility : Screen Reader Compatible
Topic : Accounting for Investments―Various Methods
Topic : Equity Method―Basic Journal Entries
Topic : Intra–Entity Sales of Inventory
Topic : Equity Method―Significant Influence Criterion [Show Less]