equity method of accounting for an investment in the common stock 1. Debt investments are recorded at the a. face value of the bonds purchased. b. face value of the bonds purchased plus interest. c. price paid for the bonds plus interest. d. price paid for the bonds plus brokerage fees. 2. Under the equity method, the investor records dividends received by crediting a. Dividend Revenue. b. Investment Income. c. Revenue from Investment. d. Stock Investments. 3. A company that acquires less than 20% ownership interest in another company should account for the stock investment in that company using a. the cost method. b. the equity method. c. the significant method. d. consolidated financial statements. 4. The equity method of accounting for an investment in the common stock of another company should be used by the investor when the investment a. is composed of common stock and it is the investor’s intent to vote the common stock. b. ensures a source of supply of raw materials for the investor. c. enables the investor to exercise significant influence over the investee. d. is obtained by an exchange of stock for stock. 5. On January 2, Dickson Corporation acquired 30% of the outstanding common stock of Crane Company for $550,000. For the year ended December 31, Crane reported net income of $90,000 and paid cash dividends of $30,000 on its common stock. At December 31, the carrying value of Dickson’s investment in Crane under the equity method is a. $541,000. b. $550,000. c. $577,000. d. $568,000. Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help
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