Each transaction listed in 1 through 4 below relates to a long-term investment is equity securities. Select the letters of the accounting effects (a through h) and place them in the space provided. Transactions may have more than one answer.
_____ 1. Using the equity method the market price of the investment increases above its cost.
_____ 2. Using the cost method the market price of the investment increases above its cost.
_____ 3. Using the equity method, the investee company recognizes a net loss for the year.
_____ 4. An investment in a 40%-owned subsidiary is sold for more than its carrying value.

Question

Each transaction listed in 1 through 4 below relates to a long-term investment is equity securities. Select the letters of the accounting effects (a through h) and place them in the space provided. Transactions may have more than one answer.
  _____ 1. Using the equity method the market price of the investment increases above its cost.
_____ 2. Using the cost method the market price of the investment increases above its cost.
_____ 3. Using the equity method, the investee company recognizes a net loss for the year.
_____ 4. An investment in a 40%-owned subsidiary is sold for more than its carrying value.

Quizplus · Accepted Answer

The Answer of Each transaction listed in 1 through 4 below relates to a long-term investment is equity securities. Select the letters of the accounting effects (a through h) and place them in the space provided. Transactions may have more than one answer.
  _____ 1. Using the equity method the market price of the investment increases above its cost.
_____ 2. Using the cost method the market price of the investment increases above its cost.
_____ 3. Using the equity method, the investee company recognizes a net loss for the year.
_____ 4. An investment in a 40%-owned subsidiary is sold for more than its carrying value.

Each Transaction Listed in 1 Through 4 Below Relates to a Long-Term