Asked by Mckenna Jakunskas on Jun 14, 2024
Verified
What is the balance in the investment account as of December 31,2015?
A) $70,000
B) $98,000
C) $56,000
D) $84,000
Equity Method
An accounting technique used to record investments in associate companies, where the investment is initially recognized at cost and subsequently adjusted for the investor’s share of the investee’s profit or loss.
Investment Account
A financial account held at a brokerage or financial institution that contains securities, cash, and other holdings for investment purposes.
Common Shares
Equity securities that represent ownership in a corporation, providing voting rights and entitling holders to a share of the company's profits via dividends.
- Acquire knowledge on the equity method for recording investments in accounting.
Verified Answer
MG
Mahathi GangavarapuJun 14, 2024
Final Answer :
D
Explanation :
$70,000 (original cost)+ $28,000 (investment income: $80,000 × 35%)- $14,000 (dividend declaration: $40,000 × 35%)
Learning Objectives
- Acquire knowledge on the equity method for recording investments in accounting.