Each transaction listed in 1 through 4 relates to an investment in a long-term equity security. Place the letter that corresponds to the effect (a through h) the transaction has on the accounting equation in the space provided. You may use each letter more than once or not at all.
Accounting Effects
a. and
b. and (Contributed Capital)
c. and (Retained Earnings)
d. and
e. and (Contributed Capital)
f. and - SE (Retained Earnings)
g. and
. The event is not reported on financial statements.
____ 1. Under the mark-to-market method, the investee company declares a cash dividend.
____ 2. Under the equity method, the investee company declares a cash dividend.
____ 3. Under the mark-to-market method, the investee company recognizes net income.
____ 4. Under the equity method, the investee company recognizes net income.
Correct Answer:
Verified
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