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Each Transaction Relates to an Investment in a Long-Term Equity

Question 112

Matching

Each transaction relates to an investment in a long-term equity security.Match the transaction to the accounting equation You may use each choice more than once or not at all.

Premises:
Under the mark-to-market method, the investee company declares a cash dividend.
Under the equity method, the investee company declares a cash dividend.
Under the mark-to-market method, the investee company recognizes net income.
Under the equity method, the investee company recognizes net income.
Responses:
+ A and + L
+ A and + SE (Contributed Capital)
+ A and + SE (Retained Earnings)
– A and – L
– A and – SE (Contributed Capital)
– A and – SE (Retained Earnings)
+ A and – A
The event is not reported on financial statements.

Correct Answer:

+ A and + L
+ A and + SE (Contributed Capital)
+ A and + SE (Retained Earnings)
– A and – L
– A and – SE (Contributed Capital)
– A and – SE (Retained Earnings)
+ A and – A
The event is not reported on financial statements.
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